In a market economy, differences in incomes:
a. reflect the relative scarcity of resources
b. provide individuals with an incentive to supply resources that are valued by others.
c. determine the income distribution among market participants.
d. all of the above are correct.
d
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Comment on the following: "The problem with models like the Edgeworth Box and the Robinson Crusoe economy is that it is silly to assume competitive behavior when there are so few individuals in the market."
What will be an ideal response?
Barriers to entry reduce the likelihood that price-setter firms will see their positive economic profits competed away over time
Indicate whether the statement is true or false
A firm pays Pam $40 per hour to assemble personal computers. Each day, Pam can assemble 4 computers if she works 1 hour, 7 computers if she works 2 hours, 9 computers if she works 3 hours, and 10 computers if she works 4 hours. Pam cannot work more than 4 hours day. Each computer consists of a motherboard, a hard drive, a case, a monitor, a keyboard, and a mouse. The total cost of these parts is $600 per computer. If the firm sells each computer for $625, then how many hours a day should the firm employ Pam to maximize its net benefit from her employment?
A. 1 hour B. 3 hours C. 4 hours D. 2 hours
The stored value of money over time should not change significantly as long as the level of inflation is:
A. high. B. low. C. adjusted by the government. D. less than your pay increases.