What are the advantages of leaving resource allocation to price allocation?
Submitted by: AdministratorThe 5 advantages are Neutral, Flexible, Freedom of choice, No administrative cost and lastly Diminished incentives. Distinguish between diminishing returns and diseconomies of scale. Diseconomies of scale I guess means as you produce more it becomes more expensive to produce.
For example, you produce output 1 for $2 but output 2 for $5 thus the second one required $3
Now let us say input for output 1 had to be doubled for input 2. One land gave output 1. Output 2 needed 2 lands. Then there are not diminishing returns.
However, as second land was costing $3 there was diseconomies of scale.
Submitted by: Administrator
For example, you produce output 1 for $2 but output 2 for $5 thus the second one required $3
Now let us say input for output 1 had to be doubled for input 2. One land gave output 1. Output 2 needed 2 lands. Then there are not diminishing returns.
However, as second land was costing $3 there was diseconomies of scale.
Submitted by: Administrator
Read Online Economics Job Interview Questions And Answers
Top Economics Questions
☺ | What is explanatory research? |
☺ | What kind of market structure is the automotive industry? |
☺ | What is an Oligopoly? |
☺ | What is the difference between project proposal and project feasibility study? |
☺ | How does outsourcing affect the economy? |
Top Business and Economics Categories
☺ | Taxation Interview Questions. |
☺ | Economics Interview Questions. |
☺ | Accounts Receivable (AR) Interview Questions. |
☺ | General Ledger Interview Questions. |
☺ | Fixed Assets Interview Questions. |