Which of the following are weaknesses of a command-based economic system?
a. It is not possible for goods to be allocated based on need rather than based on willingness and ability to pay.
b. Producers have incentives to innovate because successful innovators are not rewarded with higher profit.
c. Since price is set by central planners, price cannot freely adjust to resolve shortages or surpluses based on current supply and demand conditions.
d. Answers b. and c. above are correct.
d
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Briefly describe and discuss the different ways a natural monopoly can be regulated: Marginal cost pricing, average cost pricing, rate of return regulation, and price cap regulation
What will be an ideal response?
The correlation between X and Y
A) cannot be negative since variances are always positive. B) is the covariance squared. C) can be calculated by dividing the covariance between X and Y by the product of the two standard deviations. D) is given by corr(X, Y) = .
The inflation determines more by:
a. demand-pull inflation forces. b. expected inflation forces.
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, as the economy moves from Point D to Point B, the opportunity cost of hybrid cars, measured in terms of motorcycles,
A. initially increases, then decreases. B. increases. C. remains constant. D. decreases.