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Questions and Answers
In an economy in which decisions are guided by prices and individual self-interest, there is
In an economy in which decisions are guided by prices and individual self-interest, there is
- the potential to achieve efficiency in production. (correct)
- a strong need for government intervention in the market.
- less efficiency than would be observed in a centrally-planned economy.
- more need for a strong legal system to control individual greed than would be needed in a centrally-planned economy.
Prices direct economic activity in a market economy by
Prices direct economic activity in a market economy by
- influencing the actions of buyers and sellers. (correct)
- reducing scarcity of the goods and services produced.
- eliminating the need for government intervention.
- allocating goods and services in the most equitable way.
Which of the following firms is most likely to have market power?
Which of the following firms is most likely to have market power?
- a fast food restaurant in a college town
- a wheat farm in Kansas
- the last gas station in New Mexico for 100 miles (correct)
- a shoe store in Kentucky
The "invisible hand" directs economic activity through
The "invisible hand" directs economic activity through
The invisible hand's ability to coordinate the decisions of the firms and households in the economy can be hindered by
The invisible hand's ability to coordinate the decisions of the firms and households in the economy can be hindered by
A primary function of prices in a market economy is to provide participants with
A primary function of prices in a market economy is to provide participants with
When the government prevents prices from adjusting naturally to supply and demand,
When the government prevents prices from adjusting naturally to supply and demand,
A company that formerly produced software went out of business because too many potential customers bought illegally-produced copies of the software instead of buying the product directly from the company. This instance serves as an example of
A company that formerly produced software went out of business because too many potential customers bought illegally-produced copies of the software instead of buying the product directly from the company. This instance serves as an example of
A rationale for government involvement in a market economy is as follows:
A rationale for government involvement in a market economy is as follows:
Which of the following statements is not true?
Which of the following statements is not true?
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