When goods are produced privately, but the cost of their purchase is paid for by the taxpayer or some other third party,
a. consumers have a strong incentive to search out those firms offering them the best deal.
b. private producers of such goods will have little incentive to control costs and provide them at low prices.
c. goods and services will only be supplied if consumers are willing to pay an amount sufficient to cover their production costs.
d. the invisible hand will direct consumers and producers toward an efficient level of output.
B
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In the long run, perfectly competitive firms make zero economic profit (their owners earn a normal profit) because
A) any economic profit would attract newcomers to the industry. B) the firms are incompetent. C) any economic loss would increase the demand for the good, thereby raising its price. D) there are many buyers and sellers.
The change in consumption divided by a change in income is defined as:
a. the marginal propensity to consume. b. autonomous consumption. c. the consumption function. d. Keynes' absolute income hypothesis. e. transitory consumption.