Provide an example of each allocation method that illustrates when it works badly
What will be an ideal response?
Below are examples of when each allocation scheme would work poorly:
• Market price: Deciding court cases on the basis of who will pay the most for the decision.
• Command: Running an economy.
• Majority rule: Deciding how many acres of wheat to plant.
• Contest: Allocating food in a winner-take-all contest.
• First-come, first-served: Admitting students to college based on who applied first.
• Lottery: Assigning grades based on random chance.
• Personal characteristics: Renting only to married couples.
• Force: Stealing by threat of physical harm.
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If a consumer borrows at an interest rate greater than the interest rate at which he or she can lend, then
A) banks cannot make a profit. B) the budget constraint has a kink at the endowment point. C) the consumer must be a lender. D) this makes no difference for consumer behavior.
Suppose households attempt to increase money holdings. To stabilize output and employment, the Federal Reserve will _____
Fill in the blank(s) with correct word
The average per capita income in 2010 for low-income developing nations was:
A. $580 B. $2,100 C. $1,240 D. $4,600
Using the data in the above table, in the short-run macroeconomic equilibrium, there is
A) an inflationary gap of $1 trillion. B) an inflationary gap of $2 trillion. C) a recessionary gap of $1 trillion. D) a recessionary gap of $2 trillion.