Midterm Exam Laziza Avloyeva ECON 2000 7T 2023: Survey of Economics Dr. Timur K. Muminov Webster University in Tashkent March 10, 2023 1 Midterm Exam Q1. In response to several issues, many nations that formerly had planned economic systems have switched to more market-based ones. However, there are appearing some issues while transitioning economic systems to a more market-based economic system. But in order to understand the following issues we have to first identify what the planned economic systems market economy means. An economic system with a planned economy is one in which key economic questions were resolved by a central planner. However, the market economy is an economy that allocates resources through the decentralized choices made by several enterprises and people as they engage in marketplaces for goods and services, answering the three core concerns of the economic problem. Now we can see that some countries like Russia, Angola, Poland, Mozambique, and the Democratic Republic of Congo are developing the market-based economy. It is because there are several disadvantages of planned economic system. For example, there is lack of competition and efficiency, a lack of freedom, lack of innovation, more corruption and so many other cons. On the other hand, a market economy provides free competition among market participants. And this system is more efficient, innovative and productive. But I don’t think that a market economy can solve all of the problems but it can give a freedom, a free choice to private actors in the project when there are limited resources available thanks to the market economy. Q2. In my opinion, economists make assumptions for one reason and that is to make simple the complex sentences and make them easier to understand. For example, economists imagine that there are two countries and they produces two different products. It is an imagination, an assumption. Because we all know that there are more than 200 countries and they can produce 2 thousands of products. But they make it smaller to make it easier to understand. Assumptions make understanding accurate and reasonable. Q3. 3 Q4 4 Q5. 5 Q5. Continuation: 6 Q6. The buyers' willingness to pay at various quantities and prices is represented by the demand curve. The consumer surplus is the difference if the buyer's willingness to pay is higher than the seller's price. For example, If an item costs $10 and you're willing to pay $12, your consumer surplus is $2. Consumer surplus is the gap between what customers are prepared to pay and what they actually pay for an item. The marginal benefit of each unit of consumption for a customer is also represented by each price along a demand curve. Q7. List some of the ways that the problems caused by externalities can be solved without government intervention: social norms of moral behavior, charities, self-interest, social contracts.
