Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 2, Problem 2.1P
To determine
Command economy and laissez-faire economy.
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Consider the following dialogue between two economics students, Yvette and Bob, after a recent economics lecture.
YVETTE: Hi Bob. Today the professor said that the market decides how much of each good or service to produce. I don’t understand what that means. Nobody decides how many goods to produce. I’m so confused!
BOB: Okay, I see where you are confused. Let’s run through it one more time.
You are correct that in a market system, no one person decides what quantities of goods to produce in the economy, though that may be the case in other types of economic systems. In a market economy, output levels are determined by individual producers and consumers buying and selling goods.
Suppose that in the market for smart phones, more smart phones were produced than consumers wanted to buy. In other words, smart phone producers have surplus smart phones that they cannot sell. ______ (options: Producers, Consumers) will _____ (options: lower, raise) the price of each smart phone…
What are some examples of a command economy? Market Economy?
What are the advantages of a market economy as compared to a command economy
Chapter 2 Solutions
Principles of Economics (12th Edition)
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