How do markets provide for an efficient allocation of scarce resources?
What will be an ideal response?
The market prices of the various products, as determined by the market forces, provide incentives that implicitly allocate economic resources. The market allows the optimizing buyers and sellers to freely negotiate the prices of various goods and services. For example, in the market for apartments, optimizing landlords and optimizing renters can freely negotiate the rental price of an apartment. These market prices then provide incentives that allow for efficient allocation of scarce resources. This allocation mechanism implies, for example, that mostly highly-paid workers—and others with a high opportunity cost of time—tend to rent the apartments with the best locations.
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What factors cause private and social rates of return for primary and secondary education to diverge in developing countries?
What will be an ideal response?
Which of the following is likely among the most concentrated industries in the United States?
A) printing and publishing B) soft drinks C) tobacco products D) household vacuum cleaners
A country's balance on current account will always equal its balance on capital account
a. True b. False Indicate whether the statement is true or false
If consumption is $4000, exports are $300, government purchases are $1000, imports are $400, and investment is $800, then GDP is $5700
a. True b. False Indicate whether the statement is true or false