Which Type of Economic System Will Produce the Highest Degree

question 174

Multiple Choice

Which type of economic system will produce the highest degree of allocative efficiency?

• A)a perfectly competitive market system 
• B)a purely command economic system 
• C)a market system with limited price controls and price ceilings 
• D)a command system with limited market activity for non-essentials

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Definitions:

Underlying Asset

An asset on which a derivative instrument, such as an option or futures contract, is based, determining its value and performance.

April Option

A financial derivative contract that gives the holder the right, but not the obligation, to buy or sell an asset at a set price on or before a specific date in April.

American Put

An option contract giving the holder the right, but not the obligation, to sell a specified amount of an asset at a predetermined price before or on a specified expiration date.

European Call

An option contract that allows the holder to buy the underlying asset at a specific price only on the expiration date.