What is the difference between a command economy and a laissez-faire economy?
What will be an ideal response?
The major difference lies in how the two types of economies answer the three basic questions. In a command economy, a central government either directly or indirectly sets output targets, incomes, and prices. In a laissez-faire economy, individual people and firms pursue their own self-interests without any central direction or regulation.
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How does marginal cost change as output increases (a) initially and (b) eventually?
What will be an ideal response?
What are the different forms of bank borrowings?
What will be an ideal response?
Double markup problems arise because
a. upstream firms have no market power b. downstream firms have no market power c. upstream and downstream products are complementary in demand d. upstream and downstream firm's pricing decisions tend to increase the demand for the other product
When contestable markets exist,
a. it must be an oligopoly b. the firms set high prices and earn economic profits c. the threat of new firms entering keeps prices low d. the government must take steps to regulate the firms e. laissez-faire can lead to greater market concentration