Pls help me with this econ assignment! 1500 pts to anyone who could perfectly an
ID: 1097225 • Letter: P
Question
Pls help me with this econ assignment! 1500 pts to anyone who could perfectly answer this!! Thanks a lot!!
2. Using the concepts of marginal cost & marginal utility, discuss the nature of the inefficiency in each of the following cases:
a. An arrangement that offers relatively little coffee and much tea to people who prefer coffee and does the reverse for tea lovers
b. An arrangement in which skilled mechanics are assigned to ditch digging and unskilled laborers to repairing cars
c. An arrangement that produces a large quantity of trucks and few cars, assuming that both cost about the same amount to produce and to run but that most people in the community prefer cars to trucks
3.In reality, which of the following circumstances might give rise to each of the situations described in Discussion Question 2?
a. Regulation of output quantities by a government
b. Rationing of commodities
c.Assignment of soldiers to different jobs in an army
4.We have said that the economy's three coordination tasks are output selection, production planning, and product distribution. Which of these is done badly in the cases described in Discussion Questions 2a, 2b and 2c?
5. In a free market, how will the price mechanism deal with each of the inefficiencies described in Discussion Question 2?
Explanation / Answer
2. (a) Both tea lovers and coffee lovers could be made better off, and no one would be worse off, if the tea lovers swapped coffee for tea with the coffee lovers. Therefore the current situation (without the swaps) is inefficient.
(b) The situation is inefficient because both ditch digging and car repair are being badly done. If the jobs were switched, both would be well done.
(c) There are more trucks and fewer cars than people would prefer. With the same resources, the community could get more cars (which they want) by giving up trucks that they do not want.
3. (a) If the government regulates output quantities, it may decree quantities that differ from the community