Answer to Question #36510 in Microeconomics for lasisi

Question

What factor could led to inevitable lack of resources in the administrative command economy?

a. price do not take into account the supply and demand
b. the absence of unemployment
c. competitive producers
d. high rates of inflation

Answer 1

a. price do not take into account the supply and demand
If the price do not take into account the supply and demand, there will be disbalance between quantity demanded and supply. This may cause the shortage of one products and the surplus of another products, which can cause inevitable lack of resources in the administrative command economy.