Discuss some of the changes in the organization of the economic systems of countries transitioning from communism to capitalism. How does this type of market reform increase economic efficiency?
What will be an ideal response?
Instead of government officials making production decisions, in an economy governed by capitalism, goods are traded in markets at market-determined prices. Government-owned firms are frequently sold to private investors and individuals are permitted to start their own firms. Market efficiency is improved in a variety of ways. Competitive markets push firms to become efficient and to make production decisions based upon economic motives rather than political or other non-economic ones. Competitive markets result in an efficient allocation of production across firms and the amount of each good that is produced and consumed maximizes aggregate surplus. Finally, competitive markets allocate goods to the consumers who value them the most.
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The enclosure movement in England in the 17th century represented an attempt to transform
a. a public good into a private good. b. a private good into a public good. c. a private good into a common resource. d. a common resource into a private good.
When firms have an incentive to exit a competitive market, their exit will
a. lower the market price. b. necessarily raise the costs for the firms that remain in the market. c. raise the profits of the firms that remain in the market. d. shift the demand for the product to the left.
In Washington, D.C., there are many coffee shops, each offering nearly identical coffee but each shop is located in a different place around the city. It is likely a coffee shop in Washington, D.C., operates in a(n):
A. perfectly competitive market. B. monopolistically competitive market. C. monopoly market. D. oligopoly market.
Approximately how many people became permanent legal residents of the United States in 2011?
A. 1,062,000. B. 854,000. C. 720,000. D. 251,000.