Suppose a perfectly competitive industry can produce Roman candles at a constant marginal cost of R12 per unit. Once industry is monopolized, marginal costs rise to R16 per unit because R4 per unit must be paid to lobbyists to ensure that only this firm receives a Roman candle license.
Suppose the market demand for Roman candles is given by. The fundamental economic problem is one of scarcity. The basic questions of economics become: What to produce? How to produce? For whom to produce? You could also add When to produce? What to produce? Other significant economic questions To what extent should the government intervene in the market?
How to define economic welfare? For example, simple monetary terms, like real GDP — give only a partial reflection of living standards. Real living standards depend on other indexes like health care, quality of the environment. What is the difference between micro and macroeconomics? What are the uses and limitations of economic data? What is the importance of economics? Does globalisation help or hinder developing countries? Should higher education be free? Pros and cons of capitalism Pros and cons of carbon tax Economic pros and cons of immigration Frequently asked questions What does the government spend its money on?
Who does the government owe money to? Where does the money come from? Does a devaluation help the economy? Regarding how to produce matter and how to consume the whole thing to do economics purpose. This is great Reply. Whose definition gave importance to scale of preference Reply. Reasons why only a few countries worldwide practiced the Planned Economic System? We use cookies on our website to collect relevant data to enhance your visit.
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When will they be produced? For whom will they be produced? Where will they be produced? Anyone with a good knowledge of comparative economic systems will see some compelling doubts. Starting with:. But the same held in Maoist China, and other Communist regimes to a lesser extent. As readers of this blog are well-aware, immigration restrictions probably reshape the global economy more than all other regulations combined. These are the types of questions I absolutely hated.
I remember when I took geometry in high school, I would get all the extra credit hardest proofs right, and then I would screw up questions like this that are just regurgitating something from the textbook. Do you think the test and the questions were written by real economists? Or were they written by educators?
This question reeks of over-reliance on static models where all production knowledge is given and there is no room for learning. Mundane questions about production timing have enormous stakes the difference between empty and well-stocked supermarket shelves but often require widely dispersed knowledge to solve.
What you say is so sensible, I as a non-economist wonder how the textbook answer could ever have been B. So are goods produced by hand? By machinery? Press ESC to cancel. Skip to content Home Sociology How does each economic system answer the three basic questions? Ben Davis May 31, How does each economic system answer the three basic questions?
What are the three economic questions that every country must answer? What are three things questions each economic system social order has to figure out? Which country uses traditional economy?
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