The Law of Supply: A. is also based on the law of the Constitution. The Constitu

ID: 1133608 • Letter: T

Question

The Law of Supply:

A. is also based on the law of the Constitution. The Constitution of the U.S. makes the law of supply mandatory in all 50 states.

B. is based on the law of increasing cost. As production in an industry expands, the cost of resources increases, leading to higher costs of production.

C. postulates that in a world of self-interest, business people will only increase their production if prices are falling.

D. is based on the theory of Economic Man, or homo economicus. Economic man responds to higher prices by reducing production.

In Capitalist Systems, the profits of the capitalist class:

belong to everyone in society. Therefore, government has the right and the duty to tax these profits to provide goods and services for the poor.

B. belong to the capitalists as a residual claim on the revenue of firms. This means that the capitalist gets paid first before all other contractual obligations are met since the capitalist is the owner.

C. belong to the capitalists as a residual claim on the revenue of firms. This means that the capitalist gets paid only after all other contractual obligations are met first.

D. are calculated by subtracting profit from total revenue, plus total cost.

In pure Capitalism:

A. firms may either make a profit or suffer losses. The profits are variable and not guaranteed.

B. the profits are guaranteed for Entrepreneurs, but not for Capitalists. Entrepreneurs are guaranteed a fixed percentage of profit to encourage them to start new businesses.

C. the profits of the capitalist is guaranteed by law just like the wages paid to workers. Each gets what he or she has contracted for whether a capitalist or a worker.

D. the entrepreneur is paid a wage like other workers. As long as the work done by the entrepreneur meets the contractual standards set by the capitalist, the entrepreneur must be paid.

When Joseph Schumpeter coined the term, "creative destruction" he:

A. was referring to how rioters make a city more creative by destroying businesses and stores.

B. was referring to the process by which capitalist firms physically destroy each other's factories in order to create larger markets for themselves.

C. was referring to the fact that the invention of new products like the personal computer destroy old industries producing products like typewriters as consumers move their purchases over to the new industry.

D. only emphasized its positive character in building new industries. He failed to understand how the negative aspects might affect workers in declining industries.

When a market reaches its equilibrium price:

A. shortages and surpluses are common. This is why society must rely on command planning to get the amounts consumers desire to equal the amounts firms produce.

B. the prices paid by the consumer are higher than they should be, triggering a shortage.

C. the prices paid by the consumer are higher than they should be, triggering a surplus.

D. the total quantity of the good demanded by consumers equals the total quantity supplied by firms.