Exam 11: The Case for Free Markets: the Price System

We observe that the price per ounce of milk in a quart container is higher than the price per ounce in a gallon container.What is the likely reason for this?

Is a benevolent command economy likely to achieve greater efficiency than a purely competitive market system? Explain.

In a market system, prices are used to coordinate economic activity.

Laissez-faire refers to a situation in which there is ____ with the workings of the market system.

Keeping landing fees low at airports during the "peak" hours

If the marginal utility of a product exceeds its MC, we would want, on efficiency grounds, to

Is an efficient market allocation fair? Explain.

In an efficient market, a scarce good generally has a ____ than a less-scarce good.

In an idealized laissez-faire world, the distribution of products is

For economic efficiency, which of the following conditions should be met?

For any combination or outputs, there is an efficient allocation of income.

Input-output analysis is commonly used in production decisions.

Centrally planned economies do not use the price system for anything.

In a competitive economy, the questions of what, how, and for whom to produce tend to be regulated by

Prices are useful in coordinating society's economic planning because

Economists favor the use of peak-load pricing since it can

The "invisible hand" refers to the control that government must exercise over a market economy.

Under laissez-faire, society's decisions about how much of every product to produce depend on

What does the production possibilities frontier imply about the resource allocation?

The price of a ride on the Washington, D.C.metro depends on the time of day you ride.This is an example of