Differentiate between the coordination problem and the incentive problem
What will be an ideal response?
The coordination problem refers to the problem of bringing economic agents together to trade, whereas the incentive problem refers to the problem of aligning the interests of economic agents. These problems can occur in a command economy.
You might also like to view...
The marginal cost curves slope upward because of the principle of
A) decreasing marginal benefits. B) increasing marginal cost. C) increasing marginal benefits. D) decreasing marginal cost. E) decreasing total benefit.
The Navigation Acts (1651 and later amendments)
(a) defined the British Empire within Europe and restricted shipping and trade between it and the external world. (b) had a major purpose of enlarging and protecting the King of England's income derived from trade through shipping and trade. (c) advanced free trade across the British Empire. (d) held true for all of the above.
Which of the following is NOT conducive to the successful operation of a cartel?
A) Market demand for the good is relatively inelastic. B) The cartel supplies all of the world's output of the good. C) Cartel members have substantial cost advantages over non-member producers. D) The supply of non-cartel members is very price elastic.
In an auction where values or common or correlated, it is best for firms to participate in auction that have ________ bidders and be ________ aggressive in their bidding strategy when the true value of the item is highly uncertain.
A) more; less B) few; less C) more; more D) few; more