A friend of yours asks you why market prices are better than government-determined prices. Because you understand economic principles, you say that market-determined prices are better because they generally reflect
a. the value of a good to society, but not the cost of making it.
b. the cost of making a good to society, but not its value.
c. both the value of a good to society and the cost of making it.
d. neither the value of a good to society nor the cost of making it.
c
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Refer to the graph shown for a small country that is a price taker internationally.
Assume the foreign supply of this product is perfectly elastic at a price of $4 per unit. If there are no trade restrictions, this country will produce:
A. 4,800 units domestically and import 2,600 units. B. 2,400 units domestically and import 5,000 units. C. 4,800 units domestically and consume 4,800 units. D. 7,400 units domestically and export 5,000 units.
The basic function of advertising, according to its proponents, is to assist consumers in making informed, rational choices.
Answer the following statement true (T) or false (F)