Explain what economic efficiency is. How does a price system lead ...

[hbsimmons88]

Explain what economic efficiency is. How does a price system lead to economic efficiency?
 
  What will be an ideal response?

Question 2

A merger between firms in which one firm purchases an input from the other is called a
 
  A) conglomerate merger.
  B) horizontal merger.
  C) vertical merger.
  D) none of the above.

[meryzewe]

Answer to Question 1

Market failure is a situation in which a market economy either allocates too few or too many resources to a specific economic activity. That is, it is a situation in which a market economy does not achieve economic efficiency. The price system achieves economic efficiency as long as there are not any market failures. But, when there are market failures, an unregulated price system does not achieve economic efficiency, and there is a potential role for government to intervene in some way to bring about an efficient situation.

Answer to Question 2

C

[hbsimmons88]

YES! Correct, THANKS for helping me on my review

[AmberC1996]

Gracias!