LUOA Economics Exam Questions and Answers All Correct

LUOA Economics Exam Questions and Answers All Correct List the three main functions of the price system. - Answer-1. Transit information 2. Incentivize 3. Determine Income Distribution Choose one price system function from your list and elaborate on its characteristics as a price-system signal, or as part of the price system. - Answer-Transferring information is when the price system send out needed/important information to consumers and producers about the best way to sell and distribute products. It is a very important function and it is very much apart of the price system. Explain how the price system functions in the free market. In order to answer this question correctly, you must incorporate the three functions of the price system and the following terms: signals or signaling, scarcity, scarce resources, supply and demand, efficiency, consumers, and producers. Your response, of course, need not be isolated to only these terms. - Answer-The Price System is a way of organizing activity going on in the economy. It coordinates decisions made by consumers, owners of companies, valuable resources and producers. These people usually have no way of contacting other people who work in the economic industry except through the Price System. The Price System leads them through process after process to ultimately get them to their goal of distributing what someone needs and getting something they need themselves. First information is exchanged notifying people what someone else needs and if they can provide they do in return for something they need. Before they trade, they need to incentivize. For example if Susan can give Rachel 7 loaves of bread, Rachel has to give Susan 7 bottles of diet soda. It has to be an equal trade, and that's where incentivizing comes in to play. Lastly, they determine what they earn from distributing their products for trade. Now Rachel can sell her loaves of bread and if each loaf is $10, she ultimately gains $70, and if Susan sells her bottles for the same price, then she would gain $70. (it's never that simple I just made up an example to help understand) Then after both parties figure their income, they can decide if the trade is worth it or not. Which of the following represents a core economic fallacy from which other economic fallacies are derived? - Answer-the fallacy of examining only the short-term consequences of any given economic policy