Why does an efficient distribution of outputs among households occur in perfectly competitive markets?
What will be an ideal response?
Competitive markets ensure that households don't end up with the wrong goods and services. A household will buy a good as its willingness to pay for it is greater than (or equal to) its price. Therefore, as long as households are free to choose how to spend their incomes, they cannot end up with the wrong combinations of goods.
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Social Security is financed through _____
a. an earmarked payroll tax b. an earmarked consumption tax c. an earmarked income tax d. general taxation
Refer to the above figure. In the absence of a subsidy,
A) Qd would be demanded and QM would be supplied. B) the price Pd would be charged and quantity QM demanded. C) the quantity Qo and price Po would prevail in the market. D) None of the above is correct.