A market system works very well in solving some basic problems of the economy but it fails in some cases. Provide examples.
What will be an ideal response?
The market deals with efficiency in production through the profit motive, which discourages firms from using inputs wastefully. It also guides firms’ output decisions, matching quantities produced to consumer preferences. A price system distributes goods among consumers in accord with their tastes and preferences, using voluntary exchange to determine who gets what.Free markets will not achieve all of society’s goals. For example, they often have trouble keeping unemployment low. In fact, the unfettered operations of markets may even run counter to some goals, such as protection of the environment. Many observers also believe that markets do not necessarily distribute income in accord with ethical or moral norms.
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What is the difference in the concepts of economic growth and economic expansion?
a. Both terms are used interchangeably and refer to quarterly increases in output. b. Economic growth refers to the long-tun upward trend in output over a longer period of time, usually more than a decade, which is measured as the average annual change in output over the period. An expansion refers to a shorter time period during which output increases quarter by quarter or year by year. c. An expansion refers to the long-tun upward trend in output over a longer period of time, usually more than a decade, which is measured as the average annual change in output over the period. Economic growth refers to a shorter time period during which output increases quarter by quarter or year by year. d. Both terms are used interchangeably and refer to the long-tun upward trend in output over a longer period of time, usually more than a decade, which is measured as the average annual change in output over the period. e. Economic growth is the term reserved for periods of prosperity in less developed countries while expansion is the term reserved for developed industrial countries.
Bob's Burgers is well-known for introducing new types of burgers every month. However, after a year, it was seen that the cost of changing the price tags and food menu every month was greater than the profit earned. In order to minimize the cost, Bob's Burgers digitized its menu. The cost experienced by Bob's Burgers exemplifies _____
a. sunk costs b. opportunity costs c. menu costs d. variable costs
Marginal utility is
A. the utility obtained from the consumption of all but the last unit of a good. B. the change in utility that results from increasing the amount of a good consumed by one unit. C. the relative value of two goods when a utility-maximizing decision has been made. D. the change in the amount of a good consumed that increases total utility by one unit.
Which of the following is a possible problem faced by potential management innovators?
A. Property rights in management innovations are ill-defined. B. Implementation of managerial innovations leads to the entry of new firms in the industry. C. The supply of skilled workers decreases after the implementation of innovations. D. Companies implementing managerial innovations need to pay higher corporate taxes.