A market system works very well in solving some basic problems of the economy but it fails in some cases. Provide examples
The market deals with efficiency in production through the profit motive, which discourages firms from using inputs wastefully. It also guides firms' output decisions, matching quantities produced to consumer preferences. A price system distributes goods among consumers in accord with their tastes and preferences, using voluntary exchange to determine who gets what.
Free markets will not achieve all of society's goals. For example, they often have trouble keeping unemployment low. In fact, the unfettered operations of markets may even run counter to some goals, such as protection of the environment. Many observers also believe that markets do not necessarily distribute income in accord with ethical or moral norms.
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Define the following terms and explain their importance to the study of economics. a. public good b. externality c. irreversible decision d. moral hazard e. rent seeking
What will be an ideal response?
Today, the earth has ________ of all of the species that have ever lived
A) less than 1 percent B) about 50 percent C) about 99 percent D) 100 percent
As a manufacturer becomes a mass producer, generally productivity ____ and wage rates _____.
A. falls; fall B. rises; rise C. rises; fall D. falls; rise
Suppose the U.S. dollar is defined by law as being equal to 0.1 ounce of gold. Further suppose the British pound is defined as being equal to 0.05 ounce of gold. The implied exchange rate between the pound and the dollar is
A. A fixed rate at which $1 = 2 pounds. B. A flexible rate at which $2 = 1 pound. C. A fixed rate at which $2 = 1 pound. D. A flexible rate at which $1 = 2 pounds.