Excluded from the Generally Recognized Limitations of the Price System

question 11

Multiple Choice

Excluded from the generally recognized limitations of the price system is its inability to

• A) create an equitable distribution of income.
• B) provide sufficient amounts of public goods.
• C) allocate resources.
• D) minimize external diseconomies.
• E) produce adequate amounts of necessities consumed primarily by the poor.

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Definitions:

Comparative Advantage

The ability of a country or individual to produce a particular good or service at a lower opportunity cost than others.

Production Possibilities

The different mixes of products and services that a country can generate considering its accessible resources and current technology.

Total Output

The complete quantity of goods or services produced by a firm, industry, or economy within a specified period.

World-Market Price

The internationally agreed-upon price of a commodity, product, or service, influenced by global supply and demand.