Explain what economic efficiency is. How does a price system lead to economic efficiency?
What will be an ideal response?
Market failure is a situation in which a market economy either allocates too few or too many resources to a specific economic activity. That is, it is a situation in which a market economy does not achieve economic efficiency. The price system achieves economic efficiency as long as there are not any market failures. But, when there are market failures, an unregulated price system does not achieve economic efficiency, and there is a potential role for government to intervene in some way to bring about an efficient situation.
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Explain and show graphically the effect of a decrease in U.S. budget deficits that decrease U.S. interest rates on the demand and supply of U.S. dollars for euros
What will be an ideal response?
Assume a consumer purchases two goods: X and Y. All else constant, an increase in the price of X would cause the total utility the consumer can obtain with her available income to decrease
Indicate whether the statement is true or false