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1. In a market economy, the three economic questions are answered by which of the following? a. Prices determined by the interaction of the forces of supply and demand.b. A cartel of major transnational corporations, government agencies, and consumer advocates.c. A trilateral commission of major corporations, the military, and elite university professors.d. A central authority […]

Karl Marx believed the market system was doomed. Why do you think he was right or wrong? If all real-world economies are mixed economies, why is the U.S. economy described as capitalist, while the Cuban economy is described as communist? Suppose you are a factory manager. Describe how you might reach production goals under a

Which of the following represents key strengths of the market economy as a system of allocation? a. Goods and services are allocated based on willingness and ability to pay, rather than based on need.b. Producers have strong incentives to innovate because successful innovators are rewarded with higher profit.c. Since price is freely set based on

Most of the world’s economies are mixed economies because a. a cartel of powerful transnational firms demands it.b. the market system of allocation is always best.c. the command system of allocation is always best.d. government intervention in an overall market system exists because markets fail when there is market power, a great deal of inequality,

QuickLearn Driving School trains learner drivers. The number of candidate drivers it can train per week is given by q= 10 min (k, l )′, where k is the number of vehicles the firm hires per week, l is the number of instructors hired each week, and g is a parameter indicating the returns to

Assume each firm in a perfectly competitive market has an identical cost structure such that long-run average cost is minimised at an output of 20 units (qi= 20). The mini-mum average cost is €10 per unit. Total market demand is given by . a. What is the industry’s long-run supply schedule? b. What is the

Because firms have greater flexibility in the long run, their reactions to price changes may be greater in the long run than in the short run. Paul Samuelson was perhaps the first economist to recognise that such reactions were analogous to a principle from physical chemistry termed the Le Châtelier’s Principle. The basic idea of

Suppose that the demand for skateboard is given by and that the long-run total operating costs of each skateboard manufacturer in a competitive industry are given by Entrepreneurial talent for skateboard manufacturing is scarce. The supply curve for entrepreneurs is given by where w is the annual wage paid.  Suppose also that each skateboard manufacturer

Local fishermen sell their daily catch at the local fish market at a price of €5 per kilo. The production function for village output is where x is the quantity of bait used each week. Bait is only available from the neighbouring village who charge €10 per day to collect it from the foreshore. The

Golden Mining Company is a monopsony and can hire any number of female workers or male workers it wishes. The supply curve for women is given by and for men by where wf and wm are the hourly wage rates paid to female and male workers, respectively. Assume that Golden Mining is a price-taker in the international