Questions and Answers
Why is resource allocation a critical problem in economies?
Because the resources of a society are limited in supply, whereas the wants of the members are unlimited
What is the primary goal of resource allocation in an economy?
To minimize waste and inefficiency
What determines the allocation of resources in the private sector?
Market supply and demand, and price mechanism
What type of goods will not be produced in sufficient quantities by the market?
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What determines the allocation of resources in the public sector?
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What is allocative efficiency concerned with?
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What is a necessary condition for efficient allocation of resources in an economy?
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What is a reason for market failures leading to misallocation of resources?
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What is an example of a good that markets may fail to provide?
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What is the result of imperfect competition and presence of monopoly power in a market?
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