Exam 14: The Case for Free Markets the Price System

Society might argue that there are cases in which it is appropriate to resist price increases in situations where scarcity is serious.Included would be the case of

Prices

Using prices to promote efficiency in the utilization of bridges,

Figure 14-3 -In Figure 14-3, if person 1 and person 2 have the indicated quantities of cheese and crackers, and are on the indicated indifference curves, is there the possibility of mutually beneficial trade? Explain.

Explain why movie theaters charge more for evening performances than for matinees.

Which central coordination task has claimed the most attention of central planners?

Inefficient allocation of resources occurs when

When a shortage occurs in the market for a good, quantity

An efficient solution to a pricing problem

Keeping landing fees low at airports during the "peak" hours

Prices are useful in coordinating society's economic planning because

In a planned economy the concept of efficiency is

Under a system of laissez faire, output selection is determined by consumers' wants.

"Peak pricing" involves setting lower prices at peak times so that people can afford a good or service.

The price of a ride on the Washington, D.C.metro depends on the time of day you ride.This is an example of

Any increase in efficiency increases output available for distribution.

Price decreases always increase economic efficiency.

If the marginal utility of a gallon of milk to consumers is $2.50 and the MC of producing the gallon of milk is $1.50, then

In a free-market economy, the pricing mechanism always operates to

If the MU of half gallon of milk is $3.50 and the MU of gallon of milk is $3.25, and they both sell for the same price, we would expect consumers to