Discuss the three basic types of economic systems.
What will be an ideal response?
Three basic economic systems are the traditional, command, and market systems. The traditional system is based on decisions made according to custom, and the command system answers the three economic questions through some powerful central authority. In contrast, the market system uses the impersonal mechanism of the interaction of buyers and sellers through markets to answer the What, How, and For Whom questions.
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The long-run aggregate supply curve at potential national income is analogous to:
a. the short-run aggregate demand curve at potential national income. b. the long-run Phillips curve at the natural rate of unemployment. c. the long-run aggregate demand curve at each price level. d. the short-run Phillips curve at the natural rate of unemployment. e. the horizontal portion of the Phillips curve.
According to the neoclassical theory of distribution, the wages paid to workers
a. reflect the market prices of the goods those workers produce. b. reflect the degree of market power held by the firms that pay those wages. c. fail to reflect those workers' opportunity costs of leisure. d. are unrelated to the forces of supply and demand.
Market-oriented solutions to externalities rarely work.
A. True B. False C. Uncertain
Which of the following statements is correct?
A. Average variable cost reaches its minimum when average product equals its maximum. B. Average fixed costs are constant. C. Average variable costs always exceed average total costs. D. Average fixed costs are always less than average variable costs.