Answer the following statement(s) true (T) or false (F)
1. Supply refers to how much of a product or service is available for purchase at a given time.
2. The law of demand states that as the price for an item or service increases, so will the supply and that if the price is lower, the supply will also be less.
3. Mae bakes 100 cinnamon rolls each day to sell at her café, and each day she sells out before breakfast is over. Many of her customers ask for, but don't get one. Her customers ask that she bake more cinnamon rolls each day. This is an example of a shortage.
4. Holding all other factors constant, prices are set slightly above the point where supply equals demand.
5. The price at which supply of an item or service equals the demand for that item is known as the market price.
1. True
2. False
3. True
4. False
5. True
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A student entering college wants to assess the value of investing in human capital. To determine whether the investment will be profitable, she should compare the
a. value of her total expected future earnings with the total of her direct and indirect costs of college. b. present discounted value of future earnings with the total of her direct and indirect costs of her education. c. present discounted value of her additional future earnings as the result of the college education with the present discounted value of only her direct costs of college. d. present discounted value of her additional future earnings as the result of the college education with the present discounted value of her direct and indirect costs of college.
The income and living standards of a nation will increase when
a. jobs are protected and total employment expands. b. the prices of goods and services increase. c. the imports of goods and services fall. d. the availability of goods and services that people value increases.
Market economy vs. command economy
What will be an ideal response?
The principle of comparative advantage implies that
A. most people are harmed by trade. B. we should limit the extent to which people specialize. C. only wealthy countries ultimately can benefit from international trade. D. every country can benefit from international trade.