10 Questions
In a planned (command) economic system, who makes all decisions about resource allocation?
Government
What is the main principle underlying a planned (command) economic system?
Equity
What led to shortages of some products and surpluses of others in a pure command economy?
Price mechanism
What is one of the fundamental failings of a pure command economy related to worker productivity?
Incentives for workers to raise productivity
How are decisions made in a planned (command) economic system?
By the government according to a set plan
What is the characteristic of resource allocation in a planned (command) economic system?
Managed by the government
Which economic system allows producers the most freedom to decide what to produce?
Free market economic system
What is the primary motivation for producers in a free market economic system?
Maximizing profit
In a free market economic system, how are resources allocated?
According to producers' self-interest
Which mechanism guides resource allocation in a free market economic system?
Price mechanism
Learn about how profits signal resource allocation by firms and how high profits can lead to investment for expanding output. Explore how government quotas and efficient production methods influence cost control and profit maximization. Understand how consumer demand affects production decisions.
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