Question

Each country must ask and answer three basic economic questions. Which of the following is NOT one of those basic questions?

What goods and services will the country produce?

Who in the country will get the goods and services that are produced?

Where in the country will the goods and services be produced?

What mix of resources (or inputs) will be used to produce the goods and services?

Statement 1: Monopolies and oligopolies are examples of market failure. Statement 2: When the market fails to allocate resources efficiently (that is to their best uses), then we have market failure.

Statement (1) is true; statement (2) is false.

Statements (1) and (2) are both false.

Statement (1) is false; statement (2) is true.

Statements (1) and (2) are both true.

If society produces a pie at the lowest possible cost, and then distributes the pie evenly among its population, then:

Neither productive nor allocative efficiency is achieved.

Only productive efficiency is achieved.

Only allocative efficiency is achieved.

Productive and allocative efficiency are both achieved.

Answer 1

1).Where in the country will the goods and services be produced.

* The three basic questions each country must ask and answer are (1) what to produce (2) How to produce (3 ) For whom to produce.

2) .Statement 1 and 2 are both true .

Monopolies and Oligopolies are examples of market failures.

In Monopoly power is concentrated on the single provider ,that is the monopolist.He can create shortage of goods and services and can bring loss to the economy.So it brings market failure.

Oligopoly is a market structure where a few sellers forms the supply side .Rivalry takes the worst form among the providers.Competition is done by the non pricing factors like advertisement which misleads the consumers and compels them to buy that they do not want.

Statement 2 is true .When market fails to allocate resources efficiently we have market failures.When resources are not allocated efficiently there will be wastage .And the peoples' wants can not be satisfied in the most efficient way.

3)Productive and allocative efficiency are both achieved.

When a product is produced at the lowest cost it reflects productive efficiency.

When it is evenly distributed it also shows productive efficiency.Both solves the basic problems of the economy.