A strength of the market economy is that:
A. it results in an equal distribution of wealth.
B. resources are used efficiently.
C. planners rather than consumers determine answers to the basic economic questions.
D. information for production and distribution decisions passes directly from the government to buyers.
Answer: B
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In the short run, a perfectly competitive profit maximizing firm that has not shut down
A) is operating on the downward-sloping portion of its AVC curve. B) is operating at the minimum of its AVC curve. C) is operating on the upward-sloping portion of its AVC curve. D) is not operating on its AVC curve. E) can be at any point on its AVC curve.
Suppose the economy includes two distinct groups of people: wage earners and goods sellers. If the price level increases by 50 percent and nominal wages remain unchanged,
a. there will be no redistribution of purchasing power because all private wage earners in the U.S. economy receive indexed wages b. real wages will remain the same because nominal wages do not change c. there will be no redistribution of purchasing power because only changes in real income can change the distribution of income d. income will be redistributed from wage earners to goods sellers e. income will be redistributed from goods sellers to wage earners