When Competition Is Present and Private Ownership Rights Are Clearly

question 106

Multiple Choice

When competition is present and private ownership rights are clearly defined and securely enforced by the legal system, business firms will have a strong incentive to

• A) innovate and develop better products and lower cost production methods.
• B) spend time attempting to plunder (take) the resources of others.
• C) engage in wasteful activities that increase the cost of producing goods and services.
• D) use resources during the current period rather than conserving them for the future.

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Definitions:

Aggregate Demand (AD)

The total demand for all goods and services within an economy at different price levels, during a specific time period.

Unemployment Rate

The fraction of the working-age population that is currently unemployed and looking for a job.

Inflation Rate

The speed at which the overall price level of goods and services increases, leading to a decrease in purchasing power.

Price Index

A measurement that shows how the average price level of a selected set of goods and services has changed over time.