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

question 131

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 A produces a monitor that Cassie buys but David does not, 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:

Addresses

A collection of information detailing the location of an individual or organization, typically including elements such as street name, number, city, and postal code.

Enter Bills

The process of recording invoices received from suppliers into the accounting system.

Purchase Order

A commercial document issued by a buyer to a seller, indicating the types, quantities, and agreed prices for products or services.

Receiving a Bill

The act of recording the receipt of an invoice from a vendor for goods or services purchased on credit.