Suppose That Firms a and B Each Produce High-Resolution Computer

question 73

Multiple Choice

Suppose that Firms A and B each produce high-resolution computer monitors,but Firm A can do so at a lower cost.Cassie and David each want to purchase a high-resolution computer monitor,but David is willing to pay more than Cassie.If Firm B produces a monitor that David buys,then the market outcome illustrates which of the following principles?
(i)
Free markets allocate the supply of goods to the buyers who value them most highly,as measured by their willingness to pay.
(ii)
Free markets allocate the demand for goods to the sellers who can produce them at the least cost.

• A)(i)only
• B)(ii)only
• C)both (i)and (ii)
• D)neither (i)nor (ii)

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Definitions:

Chunks

Units of information grouped together to be processed or remembered as a single unit, facilitating easier recall.

Magic Number

Refers to the short-term memory capacity, traditionally considered to be 7±2 items, as postulated by psychologist George A. Miller.

Short-term Memory

The ability to keep a limited quantity of data actively accessible in one's consciousness for a brief duration.

Miller

George A. Miller was an American psychologist who made significant contributions to the cognitive psychology field, notably proposing that the human mind can hold 7 ± 2 pieces of information in short-term memory.