The supply-and-demand model may not be appropriate in markets with large transaction costs
Indicate whether the statement is true or false
True . If the costs of finding a trading partner are high, no trades may occur, or trades may occur at a variety of prices.
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Most people would prefer to drive a luxury car that has all the options, but more people buy less expensive cars even though they could afford the luxury car because
A) luxury cars cost a lot more than non-luxury cars. B) the marginal utility per dollar spent on the less expensive car is higher than that spent on luxury cars. C) car buyers are irrational. D) the total utility of less expensive cars is greater than that of luxury cars.
In a market economy, government officials make most production decisions in a centralized manner
a. True b. False Indicate whether the statement is true or false
Other things constant, a decrease in resource prices will lead to
a. reduced profits and a reduction in short-run aggregate supply. b. increased profits and a reduction in short-run aggregate supply. c. reduced profits and an increase in short-run aggregate supply. d. increased profits and an increase in short-run aggregate supply.
If a firm in a perfectly competitive market is producing at a level of output where marginal costs exceed marginal revenue, its profits:
A. must be negative. B. will increase if it produces less. C. are maximized. D. cannot be determined.