Author Question: Which of the following represents key strengths of the market economy as a system of allocation? a. ... (Read 28 times)

Lisaclaire · **on:** Jun 30, 2018

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 innovatorsare rewarded with higher profit.
c. Since price is freely set based on supply and demand, shortages and surplusesare minimized.
d. All of the answers above are correct.

Question 2

Assume General Motors has decided to build an assembly plant in St. Louis. The plant will employ 1,000 full-time workers at an annual wage of 40,000 each. If the marginal propensity to consume in St. Louis is 2/3, what change in income will result from operation of the plant for one year?
a. 26.7 million.
b. 40 million.
c. 80 million.
d. 120 million.