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Consider the Following Statements: A

question 46

Multiple Choice

Consider the following statements: a.Soda drinkers purchase more soda from a grocery store that sells soda at a lower price than other rival grocery stores in the area.
B.Homeowners do not take steps to increase security even though they believe it is more costly to allow burglaries than to install security monitoring equipment.
C.Manufacturers produce less of a particular cell phone when its selling price rises.
Which of the above statements demonstrates that economic agents respond to incentives?

Grasp the concept of the circular-flow diagram and the roles of households and firms.

Comprehend the foundations and implications of trade and absolute advantage.

Recognize the function of markets and the movement of resources and goods.

Appreciate the significance of production possibility frontiers (PPFs) and opportunity cost.

Definitions:

Market Economy

An economic system in which production and prices are determined by unrestricted competition between privately owned businesses, without substantial government intervention in the form of price controls.

Economic Efficiency

A situation where all resources are optimally allocated to serve each individual or entity in the best way while minimizing waste and inefficiency.

Private-Sector Risk

The risk associated with the non-governmental sector, encompassing uncertainties in business environments, market dynamics, and financial operations.

Invisible Hand

A term coined by Adam Smith to describe the self-regulating behavior of the marketplace where individuals pursuing their own interest often benefit society as a whole.