The Idea That Markets Work Efficiently

question 76

Multiple Choice

The idea that markets work efficiently:

• A) refers to the fact that self-interest can be aligned with social interest.
• B) means that trade-offs can be reduced through channeling greed toward good ends.
• C) suggests that there is never any need for government regulation, taxes, or subsidies.
• D) has been known for many centuries.

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Definitions:

Opportunity Cost

The expense incurred by not choosing the second-best option available when a decision is made or an action is taken.

Pure Capitalism

An economic system characterized by private ownership of the means of production and where investments, distribution, income, production, and prices are determined by the market.

Owns No Resources

The condition of not having access to or control over any assets, capital, or means of production.

Production Possibilities Frontier

A curve that shows the different combinations of various goods that a country can produce given certain resources and technology.