CTI Capstone Exam 2-Question with Correct Answers/ Verified
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Course
CTI
Institution
CTI
- time and effort spent on increasing production.
- ineffective work
- led to a huge supply, (supply wasted)
- This demonstrates the inefficiencies in a government run economy. Additionally, as the supply of
pelts increased, the price of pelts did not drop to ensure there was a demand because t...
CTI Capstone Exam 2-Question with Correct Answers/ Verified
- time and effort spent on increasing production.
- ineffective work
- led to a huge supply, (supply wasted)
- This demonstrates the inefficiencies in a government run economy. Additionally, as the supply of
pelts increased, the price of pelts did not drop to ensure there was a demand because the
government was in charge of setting prices and was unable to respond rapidly to the fluctuations in
supply. - ✔️✔️1. Back in the days of the Soviet Union, the government owned and operated most
of the enterprises in the economy. Most prices were set by central planners, rather than by supply
and demand, and the success or failure of Soviet enterprises was judged primarily by how well they
met the numerical targets for production, which were set by the planners. Specify three ways in
which the arrangement produced different economic end results from those in market economies
(17, 22 - 23, 27.)
Role in each resource use, and how resulting products get sold
Provide financial incentives to affect behavior in the use of resources and their resulting products.
Price guides consumers and producers and communicate the exchange value of an item - ✔️✔️2.
What are the roles of prices in an economy? Explain three roles they play.
- The fact that all resources, which have various uses, are limited, results in scarcity.
- This means that society must make trade-off to decide where resources operate most efficiently. - -
society values different products and services differently = unmet needs somewhere.
- The core values of scarcity and alternative uses determine the basic principles of supply and
demand. Thomas Sowell, argues that a market economy is the best way to determine alternative
uses and guarantees that resources are allocated in the most efficient way possible.
When few goods are available, scarcity results from all resources that are being limited. Scarcity and
alternative uses are at the heart of economics because products can be used for any different
purposes, which is left to the economy to decide the best way to use these resources most
efficiently. - ✔️✔️3. Explain why scarcity and "alternative uses" are at the heart of economics.
- Price gouging occurs due to a downward shift in supply. It is an increase in pricing, after a natural
disaster. For example, after a hurricane the demand for wood that is used to rebuild house, would
increase. If suppliers increased the price, it would be considered price "gouging". However, the
increase in price results from an increase in demand. In order for supply and demand to equal at a
set price with the rise of demand, price must also rise. This scenario is both positive and negative. In
many way it is positive because it encourages individuals to prioritize their needs and only purchase
what they need. However, it also has the potential to lead to large amounts of unmet needs. -
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