Which of the following are weaknesses of a command-based economic system?
a. It is not possible for goods to be allocated based on need rather than based on willingness and ability to pay.
b. Producers have incentives to innovate because successful innovators are not rewarded with higher profit.
c. Since price is set by central planners, price cannot freely adjust to resolve shortages or surpluses based on current supply and demand conditions.
d. Answers b. and c. above are correct.
Question 2
At the equilibrium level of real GDP, total production equals total:
a. saving.
b. investment.
c. net exports.
d. spending.
