Advantages of leaving resource allocation, Macroeconomics

What are the advantages of leaving resource allocation to price allocation?

Ans) The 5 benefits are Neutral, Flexible, Freedom of choice, No administrative cost and lastly Diminished incentives. Distinguish among diminishing returns and diseconomies of scale. Diseconomies of scale I guess means as you make more it becomes more costly to produce.

For example, you make output 1 for $2 but output 2 for $5 thus the second one needed $3

Now let us say input for output 1 had to be doubled for input 2. One land gave output 1. Output 2 required 2 lands. Then there are not diminishing returns.

Though, as second land was costing $3 there was diseconomies of scale.

 

Posted Date: 4/1/2013 5:04:16 AM | Location : United States







Related Discussions:- Advantages of leaving resource allocation, Assignment Help, Ask Question on Advantages of leaving resource allocation, Get Answer, Expert's Help, Advantages of leaving resource allocation Discussions

Write discussion on Advantages of leaving resource allocation
Your posts are moderated
Related Questions
Potatoes cost Janice $1 per pound, and she has $5.00 that she could possibly spend on potatoes or other items. If she feels that the first pound of potatoes is worth $1.50, the sec

You operate your own small building company and have decided to bid on a government contract to build a pedestrian walkway in a national park during the coming winter. The walkway

U.S. employers have strongly opposed a corporatist agenda, under which employment relationships would be jointly governed by unions, employers, and government. This orientation has

A monopoly is broken into a number of competitive parts. Predict the changes in output and price which are likely to take place. Making the basic assumptions that,  1) The i

Store of value - Economic functions of money If you are a fisherman and have a temporary surplus of fish that you want to store for the future, storing the fish might not b

Crowding out would most likely occur when: A. the Congress enacts budget cuts to balance the budget. B. workers lose jobs as a result of anti-inflationary fiscal policies. C. the f

# ???? .. difference between gdp at market price and nnp at factor cost

Q. Augmented Phillips curve? Remember that Phillips curve, as it was incorporated into the Keynesian model, presumed a stable relationship between wage inflation andunemploymen

effects of tax increase on the gross domestic product

Introduce about the open-economy macroeconomics shortly. The Open Economy: a. One of the major concerns introduced through open-economy macroeconomics is the exchange rat