Analyzing the behavior of the firm enhances our understanding of: a

Economics Dec 08, 2020

Analyzing the behavior of the firm enhances our understanding of:

a. What decisions lie behind the market supply curve,

b. How consumers allocate their income to purchase scarce resources,

c. How financial institutions set interest rates,

d. Whether resources are allocated fairly.

Expert Solution

The correct answer is a. What decisions lie behind the market supply curve.

Because the behavior of firms is tied to the production of a good or service (and not its consumption), understanding this behavior will provide insight on the market supply curve.

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