When nations attempt to move quickly from central planning to a market system, they face the obstacle of high transaction costs in large part because
A) market systems are unnatural and require careful design.
B) people who have lived under socialism lack the basic skills a market system requires.
C) people who have long lived under socialism are not sufficiently individualistic.
D) the experience of socialism makes people distrustful of one another.
E) they lack many of the institutions that develop over time in a market system.
E
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In deciding how much money to hold, individuals
A) must understand the velocity of the money and its role in the economy. B) compare the inflation rate with the market interest rate. C) base their decisions on what others are doing. D) evaluate the relative costs and benefits of holding money versus other assets.
With a cubic production function of the form Q = aK3L3 + bK2L2, in order for the average and marginal product functions to have their usual theoretical properties, it must be the case that
A. a > 0, b > 0 B. a < 0, b > 0 C. a < 0, b < 0 D. a > 0, b < 0