Why is it likely that a market economy will perform better than a command economy?
What will be an ideal response?
Difficulties like the coordination problem and the incentive problem suggest that the reason for the fall of the most of the planned economies is that the central planner does not fully understand consumer wants and the production capabilities of every sector of the economy, and it is difficult to incentivize workers if prices are not utilized. Because any individual knows only a small fraction of all that is known collectively, it is impossible to replicate the work of the invisible hand. Therefore, a market economy is likely to perform better than a command economy.
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The aggregate supply curve illustrates that the
A) higher the price level, the greater the quantity of real GDP supplied. B) higher the price level, the smaller the quantity of real GDP supplied. C) aggregate demand curve is not needed to determine the aggregate price level. D) price level does not affect the quantity of real GDP supplied. E) amount of potential GDP increases when the price level rises.
Human resources that perform the functions of organizing, managing, and assembling the other resources are called
A) physical capital. B) venture capital. C) entrepreneurship. D) productive capital.
If the price is $12 per pizza, the perfectly competitive firm in the above figure is
A) making an economic profit. B) making zero economic profit. C) incurring an economic loss. D) More information about the firm's total cost is needed to determine if the firm has a positive economic profit, zero economic profit, or an economic loss.
The text discusses unions in the context of the New Deal. It concludes that there was _____ in organized labor's relationship with government because _______
a. deterioration; Roosevelt's early speeches had created excessively high expectations. b. an improvement; labor gained the right to strike and organize free of employer interference. c. deterioration; organized labor was made subject to the same controls as big business. d. an improvement; military preparations reduced unemployment.