Economics Markets CC#19

What is the main difference between free market economies and centrally planned economies?

• In free market economies, supply and demand determine production, while in centrally planned economies, government agencies decide.

• Centrally planned economies have no shortages, while free market economies do.

• Free market economies focus on heavy equipment, while centrally planned economies focus on consumer goods.

• Free market economies are less efficient than centrally planned economies.

Why have competitive markets been more successful at providing what people want?

• Because they rely on government agencies to decide what gets produced.

• Because they are based on supply and demand dynamics.

• Because they focus solely on heavy equipment and military hardware.

• Because they ensure everyone who wants a job has one.

What are the two types of efficiency discussed in the context of economics?

• Productive and allocative efficiency.

• Central and free market efficiency.

• Government and private sector efficiency.

• Consumer and producer efficiency.

What does allocative efficiency mean?

• Products are being made at their lowest possible cost.

• Businesses are maximizing their profits.

• The things being produced are what consumers actually want.

• There are no wasted resources in production.

How do free market producers learn about consumer preferences?

• By guessing consumer needs.

• By looking at price signals and conducting market research.

• Through government reports.

• Through central planning.

What is the argument against gift giving according to economist Joel Waldfogel?

• It fosters love and affection among family and friends.

• It is inefficient because it may not match the end consumers' values.

• It is the most efficient way to distribute resources.

• It boosts consumer spending and GDP.

What role do price signals play in a free market?

• They tell producers what to make and help distribute goods to those who value them most.

• They ensure that everyone gets exactly what they want.

• They help distribute resources based on government decisions.

• They indicate which companies are going out of business.

What is the stance of most economists on government involvement in markets?

• It has no impact on the efficiency of markets.

• It is necessary when markets fail to meet society's needs.

• It is always bad and should be avoided.

• It should control all aspects of the economy.

What is price gouging and why do some economists defend it?

• It is lowering prices in emergencies, which is defended because it helps consumers.

• It is the government controlling prices, which is always efficient.

• It is raising prices for essential items in emergencies, defended because it can encourage supply and efficient distribution.

• It is the practice of giving away goods for free in crises, which is inefficient.

What is the main message regarding consumer power in a market-based society?

• Consumers can influence corporate behavior and market outcomes through their purchasing decisions.

• Only government intervention can influence corporate behavior.

• Consumers have no real power and must accept what corporations offer.

• Market-based societies do not allow for consumer choice.