Which statement best describes a command economy? A The production of goods and

Question

Which statement best describes a command economy? A The production of goods and services is determined primarily through the action competitive markets, but the allocation (Le., the direction and coordination) of goods and services is determined primarily by the government. B. The production of goods and services (ie, society's economic output) is determined primarily by the government, but the allocation (i.e, the direction and coordination) of society's economic output is determines primarily through the action of competitive markets C Both the production of society's economic output and the allocation of such output is directed primacily through the action of competitive markets th the production and allocation of society's output is determined primarily government In a competitive market economy, prices: A. Influence consumers (households) in their purchase of goods and services. B. Influence businesses in their purchases of economic resources. C. Influence workers (labor) in making occupational choices D. All of the above. 8. The competitive market system A. Encourages innovation because government provides tax breaks and subsidies to those who 9. B. Discourages innovation because it is difficult to acquire additional capital in the form of new C. Discourages innovation because firms (businesses) want to get all the profits possible from D. Encourages innovation because successful innovators are rewarded with economic profits. develop new products or new productive techniques. machinery and equipment. existing machinery and equipment. 10. Entrepreneurs reap rewards in a competitive market economy because: A. Labor contracts to accept all the risks. B. Laws favor suppliers by shifting risks to consumers. C. Entrepreneurs accept the risks of their businesses failing. D. The insurance industry favors government allocation of economic output. Remainder of page intentionally left blank.]

Explanation / Answer

7. Command economy is a system is which both production and allocation of society's resources is determined primarily by the government (option d)

8. In a competitive equilibruim, all of the above conditions hold. (option d)

9. Competitive market system encourages innvoation because successful innovators are rewarded with economic profits (option d)

10. entrepreneurs reap rewars in a competitive market economy because: the entrepreneurs accept the risk of their business failing. (option c)

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