Macroeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506756
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 2, Problem 5CQ
To determine
Major function of a middleman and its relevance.
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Chapter 2 Solutions
Macroeconomics: Private and Public Choice (MindTap Course List)
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- Economist Adam Smith referred to "the invisible hand" of the market, but that invisible hand is really just the workings of Group of answer choices A altruism B prices C comparative advantage D productivityarrow_forwardConsider the following dialogue between two economics students, Yvette and Bob, after a recent economics lecture. YVETTE: Hi Bob. Today the professor said that the market decides how much of each good or service to produce. I don’t understand what that means. Nobody decides how many goods to produce. I’m so confused! BOB: Okay, I see where you are confused. Let’s run through it one more time. You are correct that in a market system, no one person decides what quantities of goods to produce in the economy, though that may be the case in other types of economic systems. In a market economy, output levels are determined by individual producers and consumers buying and selling goods. Suppose that in the market for smart phones, more smart phones were produced than consumers wanted to buy. In other words, smart phone producers have surplus smart phones that they cannot sell. ______ (options: Producers, Consumers) will _____ (options: lower, raise) the price of each smart phone…arrow_forwardAvon pays its sales personnel a commission for every sale they make. Which economic principle is Avon trying to apply? Group of answer choices A)People face trade-offs B)Trade can make everyone better off C)Markets can make everyone better off D)People respond to incentivesarrow_forward
- What type of economists believe that markets naturally self-correct, and will reward good strategies and punish bad ones?arrow_forwardWhy is economics often described as the science of constrained choice?arrow_forwardWhich of the below statements DOES NOT capture Economics? Group of answer choices Economics tells us that there is no theoretical limit to how well we can live or how widely our wealth can spread. The economic prosperity of an economy requires that every person in that economy have a Ph.D. degree. Wheelan argues that the free market system does not make poverty inevitable. Economic development is not a zero-sum game. Even the most prosperous economy will contiue to require certain manual tasks that do not require advanced college degrees. These tasks cannot be replaced with automation. Expecting Ph.D.s or people with professional education to do such tasks will have a high opportunity cost.arrow_forward
- Which of the market structures is the easiest to penetrate and why? Please explain.arrow_forwardIn the words of Columbia economist Jeffrey Sachs, “Markets won.” But will markets stay the winner?arrow_forwardSmith points out the possibility of producers contriving to raise prices. Are there other problems with the free-market system that he did not point out?arrow_forward
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