Question 14(1 point)

Which of the following statements is true?

a

In a market system, firms face risks. The profitability of the firm depends on how well it manages its risks.

b

Profits flow to the owners of the firms as their reward for bearing the risk of losses due to factors such as input shortages, changes in consumer tastes, and natural disasters that affect the supply chain.

c

Employees and suppliers to the firm face much more risk (than firms do): Most of the time, they don't get paid regardless of how well the firm is doing.

d

All of the above.

e

Only a) and b)

Question 15(1 point)

Which of the following statements is true?

a

Examples of market failures are natural monopolies, public goods, externalities, and asymmetric information.

b

The government cannot increase the effectiveness of a market system.

c

The combination of technology and the prices of the required resources determine the most efficient production technique.

d

All of the above.

e

Only a) and c)

Question 16(1 point)

Which of the following statements is true?

a

When there is an excess demand, the price of the good will increase.

b

Competitive markets generate productive efficiency and allocative efficiency (assuming no market failures).

c

Productive efficiency refers to the production of any particular good in the least costly way, through the use of the best technology and the right mix of resources.

d

All of the above.

e

Only a) and b)