Answer the following questions true (T) or false (F)
1. In a free market there are virtually no restrictions, or at best few restrictions, on how factors of production can be employed.
2. Crude oil is not an example of a factor of production, but when crude oil is processed into gasoline, it is a factor of production.
3. Each person goes about her daily business seeking to maximize her own self interests. In doing so, she contributes to the welfare of society at large. This is the idea underlying Adam Smith's "invisible hand."
1. TRUE
2. FALSE
3. TRUE
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A supply curve that is vertical
A) is perfectly inelastic. B) is impossible. C) has an elasticity equal to 1. D) is perfectly elastic.
The demand for a productive resource is said to be "derived" because the demand for the factor:
A. Depends on the demand for the product it helps to produce B. Depends on the demand for a complementary factor C. Is derived from the state of the economy D. Is derived from government policy