Each response must have a minimum of 150 words MUST have references for each response!Quality work! No Plagiarism!

Ch. 2:The Market System and the Circular Flow

1. Innovation is often associated with the products the organization sells. However, innovation can be much more broadly interpreted in the organization. What other types of innovation could an organization employ to gain a competitive advantage and earn economic profits?

NOTE: competitive advantage just means an advantage; it is not related to the concepts of comparative and absolute advantage that you are studying.

2. What is the difference between laissez-faire capitalism, the command system, and the market system?

3. How does the "invisible hand" operate and why do market economies usually do a better job than command economies at efficiently transforming economic resources into desirable output?

Ch. 5: Government's Role and Government Failure

4. Discuss the following statement. "Politicians would make more rational economic decisions if they weren't running for reelection every few years."

5. Why does "government failure" happen?

6. How can the government's power to coerce (influence economic behavior) be economically beneficial?

Ch. 6: Elasticity

7. Identify two products whose demand is price elastic and two whose demand is price inelastic. Explain why you arrived at your conclusions.

8. Different products have different elasticities. Heart medication, for example, is inelastic and corn is elastic.

All firms can increase the volume of goods or services sold by cutting prices; however, elastic products are much more price sensitive than inelastic products. Find a product that has not already been selected and describe the price elasticity.

How much control might an organization have over pricing based on a product's elasticity? Discuss this question in terms of elasticity.