Question

The seaport town of New Monopoly has become extremely popular with shipping companies due to its superior location. The port has become so congested that ships must wait hours every day just to dock. This is an example of:1- marginal analysis.2- a private good.3- a recession.4- market failure.B: The mayor of New Monopoly realizes that the congestion at the port costs the shipping companies and his town money. Which decision would NOT move him towards a command economy?1- The mayor orders the port\'s employees to work extra hours.2- The mayor decides to only allow the five most profitable shipping companies to use the port.3- The mayor decides to let individual firms and consumers find a solution for the excessive wait time.

Answer 1

Answer:

The correct answer is option 4.  

B. The correct answer is option 3.  

Explanation:

The seaport town here became extremely popular with shipping countries due to its location. It increased the demand for docking at the port. As a result, the port became congested and ships must wait for hours. This is an example of market failure.

Here, the market is not able to efficiently allocate the product. The demand for the port is higher than what the market is able to supply efficiently.  

A command economy can be defined as the economy in which the activities are controlled by any central agency, generally a government.  

The Mayor instead of controlling if tries to solve the problem through the working of the market forces then it would be farthest from a command economy. If Mayor intervenes in any way then it is a command economy.