Economic Institutions Are Important in Helping to Govern and Determine

question 44

Multiple Choice

Economic institutions are important in helping to govern and determine economic outcomes. Which of the following would NOT be an example of an economic institution?

• A) the existence of various regulatory agencies, such as the Securities and Exchange Commission, that affect the integrity of the investment community
• B) First National Bank of Chicago
• C) the tendency of the public to deposit funds in banks and financial institutions, which are considered safe, rather than purchasing gold or jewelry
• D) disclosure provisions in investment contracts

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Definitions:

Long-run Profits

The potential earnings of a business over a period long enough for all inputs to be adjusted, considering the firm's ability to enter or exit markets.

Factor Price

The price at which factors of production (land, labor, capital) are bought and sold.

Production Function

A mathematical model that describes the relationship between inputs used in production and the resulting output.

Profit-maximizing

The process or strategy of adjusting production and operations to achieve the highest possible profit under given conditions.