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Economic Analysis of Social Issues 1st Edition by Alan Grant
Edition 1ISBN: 978-0134098371Economic Analysis of Social Issues 1st Edition by Alan Grant
Edition 1ISBN: 978-0134098371 Exercise 2
[Related to Application 1.2 on page 8] Relative to their populations, the former communist countries of East Germany, Romania, and Cuba won a disproportionate number of Olympic medals. Explain how these economies were able to produce such outstanding Olympic teams. Then discuss the opportunity cost of their Olympic success.
Explanation
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Command economy:
Command economy is that economic system within which the decisions associated with production and distribution are taken by the government of that particular economy.
Trade-off is a proxy for Opportunity cost. It refers to the sacrifice that has to be made in return for a product or a service.
Success of command economies in Olympics:
The communist countries follow a command economic system where the government plays the role of a dictator. Few former communist countries were able to put up an outstanding performance in international sports. These nations were able to grab more number of medals in relation to their population because it was a Command economy. It was easy for these countries to find talented athletes and train them, and the athletes had no other option but to follow the orders of the government. The governments ensured that the talents and skills of these selected athletes were streamlined towards preparing and winning international sports championships.
In this case, the trade off is between athletes training and winning championships and the use of their skills in other productive activities in the form of labor, that can contribute to nations growth and development which is of more value to the society. So increase in nation's total production will be the opportunity cost for its success in international championships.
Command economy is that economic system within which the decisions associated with production and distribution are taken by the government of that particular economy.
Trade-off is a proxy for Opportunity cost. It refers to the sacrifice that has to be made in return for a product or a service.
Success of command economies in Olympics:
The communist countries follow a command economic system where the government plays the role of a dictator. Few former communist countries were able to put up an outstanding performance in international sports. These nations were able to grab more number of medals in relation to their population because it was a Command economy. It was easy for these countries to find talented athletes and train them, and the athletes had no other option but to follow the orders of the government. The governments ensured that the talents and skills of these selected athletes were streamlined towards preparing and winning international sports championships.
In this case, the trade off is between athletes training and winning championships and the use of their skills in other productive activities in the form of labor, that can contribute to nations growth and development which is of more value to the society. So increase in nation's total production will be the opportunity cost for its success in international championships.
Economic Analysis of Social Issues 1st Edition by Alan Grant
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