Which of the Following Statements Is True

question 2

Multiple Choice

Which of the following statements is true?

• A) Command economies do a better job at maximizing social welfare in comparison to market economies.
• B) The incentive problem and the coordination problem lead to lower efficiency in market economies.
• C) Central planners in command economies have to make decisions that prices would automatically have made in market economies.
• D) Bringing economic agents together to trade is easier in command economies than in market economies.

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Definitions:

Expected Revenue

The total amount of money anticipated to be received for goods or services sold, calculated over a specific period.

Probability

A measure of the likelihood that a particular event will occur.

Reservation Price

The maximum amount a buyer is willing to pay for a good or service or the minimum amount a seller is willing to accept.

English Auction

An auction format where buyers bid openly against one another, with each subsequent bid higher than the previous, until the highest bidder wins.