Which of the following are weaknesses of a command-based economic system?
a. It is not possible for goods to be allocated based on need rather than based on willingness and ability to pay.
b. Producers have incentives to innovate because successful innovators are not rewarded with higher profit.
c. Since price is set by central planners, price cannot freely adjust to resolve shortages or surpluses based on current supply and demand conditions.
d. Answers b. and c. above are correct.
d
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An increase in the demand for a good will tend to bid up the cost of acquiring the good more
A) if suppliers respond by quickly making larger quantities available. B) if the cost of transferring resources out of other uses into production are low. C) in the short run than in the long run. D) if the supply curve is highly elastic.
One reason markets may fail to provide the optimal quantity of public goods is the problem of
A) determining what the public wants. B) nontariff barriers. C) nondiscrimination. D) free riders. E) economic integration.