Policy of laissez faire in managing economic activities

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1. Adam Smith favors a policy of laissez faire in managing economic activities. Why?

2. Economics deals with the efficient use of resources? Why?

3. Marginal analysis tends to produce more optimal outcomes when working with scarce resources. How?

4. It is possible for everyone to enjoy comparative advantage in a task of their choosing. Why?

5. Prices and wages help coordinate economic activities. How?

6. Friedrich Hayek wrote, “…to assume all the knowledge to be given to a single mind is the same manner in we assume it to be given to us as the explaining economists is to assume the problem away and to disregard everything that is important and significant in the real world.” Explain why central planning eventually leads to misallocation of resources and corruption.

Reference no: EM13741207

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