In a free-market economy, the pricing mechanism always operates to
a. produce an equitable distribution of income.
b. provide an efficient allocation of resources.
c. correct any inequality in distribution of output.
d. equate consumers' desires with ability to pay.
b
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A best response is ________
A) one player's optimal action choice irrespective of the action of the other player B) one player's optimal action choice taking the other player's action as given C) an action choice that always results in a zero payoff to the opponent D) an action choice that results in equal payoffs to all the players in a game
In the market for magazines, the "income effect" means that
A) magazines are usually purchased by people with higher than average incomes. B) a decrease in the price of a substitute product like books will make magazine readers feel a little poorer than they were before. C) an increase in the price of magazines will reduce the total purchasing power of magazine readers, making them able to afford fewer magazines. D) an increase in the price of magazines will raise the relative price of magazines to books, causing magazine readers to read more books and fewer magazines.