Question

Economic efficiency is the primary guide in answering which of the fundamental questions in a market economy? Multiple Choice O How can the system accommodate change? 0 What will be produced? Who is to receive the output? 0 0 How is the output to be produced? < Prev 15 of 50 !!! Next >

Answer 1

As per HOMEWORKLIB RULES, i am only liable to answer first four questions,rest are optional. Kindly upload remaining questions again.

1. What to produce, how to produce and for whom to produce are the central problems. Economic efficiency is state in which every resource has to be utilized to its full potential, with minimum waste. So, primary guide to economic efficiency is how is the output is to be produced.

2. In a competitive market, the price has to be low to drive out the firms with higher price and in order to reduce price, cost should be cut down. so, the firms are motivated to minimize the cost of production because competitive pressure will drive out higher- cost producers.

3. In a command economy like the old Soviet Union, one is able to improve one's lot and get ahead in society largely through participating in political hierarchy.

4. The cost of new technique provided will be 28 which is lesser than cost of the 5 techniques already given. So, this technique should be adopted even though the economic profit would be reduced slightly.