1. A business owner's decision to show more care for consumers is a
decision to accept lower levels of profits.
False
Generally, it is in the best interest of a consumer to purchase/consume a product at the lowest cost possible to them. When considering this question, it is important to think of it as an investment and not a one time cost. When showing care for a consumer, the consumer is more likely to return to that business and raise their lifetime value. 2. A non-regulated monopoly tends to charge the highest possible prices.
True
Although monopolies control a market, they still however do not have complete control over pricing their products. These prices are set by supply and demand. A monopoly may occupy a market that consumers have no interest participating in, causing the monopoly to lower its prices. 3. If one nation produced everything better than another nation, there is no economic reason for two nations to trade.
False
Although a nation can produce the highest quality product, opportunity cost and time value of money must also be considered. The first goal of a nation should be to provide its citizens with products at the highest quality at the lowest cost. The second goal is to make as much of a profit as possible. To achieve this, opportunity cost of producing one product domestically instead of importing must be considered. The time value of the money invested into that product instead of another product must also be considered.
4. If someone makes an economic gain, someone else loses.
False
This is often the antithesis of reality- especially in a capitalistic economy. Within capitalism, for a business to sell a product, the consumer must believe that the product has more value than their money; the business must believe the money has more value than the product. If this shared mindset did not exist, capitalism would not work. 5. You get what you pay for.
False
This can go both ways and entirely depends on supply and demand. This can be applied literally to a book that has much more value than you pay for or a product that is overpriced. Even more, a great example of this is within equity markets. The value of your investment can fluctuate, however your original investment does not change. 6. If mass transportation fares are raised, almost everyone will take the trains anyway.
True
This is supply and demand. Consumers will buy more at lo...
