When Price Is the Rationing Criterion, Individuals Have a Strong

question 179

Multiple Choice

When price is the rationing criterion, individuals have a strong incentive to

• A) ignore the wishes of others when making decisions about how to use their resources.
• B) provide services to others in exchange for income.
• C) avoid exchanges because in every exchange there will be one person who gains and another who loses.
• D) substitute promises for the consistent delivery of a quality product.

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Definitions:

Comparative Advantage

The ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than other producers.

Scarcity

A fundamental economic problem of having seemingly unlimited human wants in a world of limited resources.

Goods

Tangible products or commodities that are manufactured or produced for sale or exchange.

Resources

A broad term that encompasses all the materials, assets, and inputs used by individuals or organizations to produce goods and services.