Pure competition produces a socially optimal allocation of resources in the long run because:

Refer to Figure 3-1. If the product represented is an inferior good, a decrease in income would be represented by a movement from

A) A to B. B) B to A. C) D1 to D2. D) D2 to D1.

When compared to exchange systems that rely on money, disadvantages of the barter system include

A) the requirement of a double coincidence of wants. B) lowering the cost of exchanging goods over time. C) lowering the cost of exchange to those who would specialize. D) encouraging specialization and the division of labor.