Order Basic Economic Problem Discussion
Order 57847338
Order Basic Economic Problem Discussion
Basic Economic Problem
The central economic problem is one of scarcity. Why are goods scarce?
What is a normative statement?
“The government’s main aim should be the control of inflation” is a
= 4h normative/positive statement?
Order Basic Economic Problem Discussion
What is opportunity cost? The next best alternative sacrificed.
The framework of a market or capitalist system contains seven essential
features – name them. Private property, Freedom of choice or enterprise,
Self-interest as a dominating motive, Competition, A Reliance on the price
system, A very limited role for government, Optimum allocation of resources.
An allocation in Pareto Optimum is when it is …. 2? No longer possible to
make any member of society better off by allocating resources without at the
same time making someone else worse off.
When cannot Pareto Optimum exist in a free market economy? Where
there is a divergence between private and social costs.
Market prices will only reflect….. Private costs.
Which costs reflect the true opportunity costs of production? Social costs.
Competition, as economists see it is essentially….. Price competition.
State four unacceptable features of laissez-faire? |nstability, Monopolies,
Inequalities, Economic change.
What are the advantages of centrally planned economies? Public goods,
Merit goods, Production and consumption of demerit goods is stopped perhaps
by direct intervention, Greater equality in the distribution of wealth, Stability – if
demand falls, production is reduced gradually , Necessities for everyone will be
produced in advance of luxuries, Resources need not stand idle during a
recession, Social costs and benefits may be incorporated in the decision-making
process, Goods can be distributed according to need rather than income.
What are the disadvantages of centrally planned economies? Reduction
of consumer sovereignty, Bureaucracy, Inefficiency – if efficient, planners raise
the targets therefore deliberate inefficiency.
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