Profits and losses are TRUE signals because they
A) convey information about true long-run profits.
B) cannot be misinterpreted by entrepreneurs.
C) convey information about where to place resources and reward people who act on the information.
D) reward people who make profits with even more profits and punish those who make losses with even more losses.
Answer: C
You might also like to view...
A monopoly firm operating with no trade will produce the profit-maximizing quantity where:
a. the firm's MC = MR, where MR is declining and below price. b. MR begins to increase and MC begins to decrease. c. P = MC. d. the firm's MC = MR, where MR is declining and equal to price.
Which of the following would be considered a "leisure" activity by economists?
A. Driving an on-duty taxi. B. Driving a bus for a city. C. Driving to the movies. D. Driving a forklift for work.