Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
From a social welfare perspective, what circumstances may cause too many frims to enter a market? Explain why.
Expert Solution
Introduction
It is the socialist market structure where the resources used in the process of production are owned and governed by the public authority. These public authorities are work with the sole purpose of social welfare, as they use these productive resources in such a way that maximizes social welfare.
But on the contrary, if these socialist economy is being run by the autocrats who do not care for democracy, then it often leads to economic disaster or economic collapse. This is the primary reason that despite working for social welfare there exists no successful economy under a socialist type of economy.
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