The three fundamental economic questions of what, how, and for whom:
A) exist because of scarcity.
B) are much more serious in a socialist system.
C) are not serious in a capitalistic system.
D) are not relevant in the industrialized world of today.
Ans: A) exist because of scarcity.
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If firms are price setters, a small decline in the demand for their outputs will cause them to
A) reduce price and reduce the level of output produced. B) reduce output in the short run, but reduce price in the long run. C) reduce price in the short run, but reduce output only in the long run. D) increase price in the short run to offset the effect on profits of a decline in output.
Pricing is made difficult by
A) firms having multiple products. B) concerns about the response of competitors. C) concerns about consumer linkages of price and quality. D) all of these choices make pricing difficult.