MMicro ms Flashcards

1
Q

Define command economy

A

A command economy is where all resources are owned by the government or central authority, who decides what to produce, how to produce it and who for.

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2
Q

Define ceteris paribus

A

All other things being equal.

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3
Q

Define asymmetric information

A

Where one party in a transaction has more or superior information compared to another,

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4
Q

Why may the government provide a good/service?

A

To reduce inequality, as good/service provided by private firms may be unaffordable for low income households.

To reduce imperfect information. This allows a more efficient allocation of scarce resources.

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5
Q

What happens to the demand for inferior goods as income increases?

A

As income increases, demand for inferior goods decreases.

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6
Q

PEY for inferior goods is…

A

negative.

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7
Q
A
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