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THE GOVERNED ECONOMY
The governed economy contains central authorities often simply called "the government" - who levy taxes on firms and households and which engages in numerous activities such as defending the country, making and enforcing the laws, building roads, running schools, and predicting weather.
When the government produces goods and services that households desire such as roads and air traffic control, it is obviously engaged in a useful activity and is obviously adding to the sum total of valuable output. The National Income Statistician count as part of the GNP every government expenditure on goods and services, whether it is to build a scud missile to promote police protection, or to pay a civil servant to file and re-file papers from a now defunct ministry.
Economics is generally defined as the problem of how best to allocate limited resources, limited because needs are characterized as unlimited, but common sense tells us that rather
The production function of a small shop that frames pictures is Q = 5 √ LK where Q is the number of pictures framed per day, L is labor hours and K is the machine hours.
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Given the following payoff matrix (a) indicate the best strategy for each firm (b) why is the entry deterrent threat by firm Ato lower the pruce not credible
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