Question

Why isn’t the economy arranged as a vast (market) collection of independent, individually owned/operated economic entities?

Why isn’t the economy arranged as a vast (market) collection of independent, individually owned/operated economic entities?

Homework Answers

Answer #1

The economy is not arranged as a vast collection of independently, individually owned/operated economic entities because of the reason that an economy as a whole consists of 4 component - Consumption, Investment, Government spending, Exports. As these components are interrelated and interdependent on one another, and separating any one component from the other is impossible. Thus, an economy cannot be arranged as a collection of independent, individually owned economic entities.

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