1. What does the term "economizing problem" mean for an individual and for society? Include the four economic resources and the opportunity cost in your answer. Also define by example (one sentence each) the following: "other things equal" assumption, productive and allocative efficiencies, and consumer sovereignty. 2. Explain how the market system provides a strong incentive for technological advance and creative destruction. Within your answer, provide three virtues of the market system. How does the circular flow model fit into this discussion? Please be specific and use examples.

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The economizing problem is an economic theory about the relationship between supply and demand that has evolved from the writings of Austrian philosopher Ludwig Von Mises (1881-1973). After establishing himself as a classic liberal economist at the Austrian School, he migrated to the United States in 1940, facilitated by a grant from the Rockefeller Foundation. Mises opposed imperialism, in which a nation invades other countries with the intent of seizing resources.

An influential 1912 book by Mises called The Theory of Money and Credit was an extension of a research program started by the father of capitalism, Adam Smith. The book foreshadowed the creation of America's financial engine for corporate and government borrowing, the Federal Reserve, the following year. He emphasized that when governments print money, it plays a role for investing in resources, which affects corporate production and, ultimately, consumer choices.

When resources become scarce, it raises the question of how...

(The entire section contains 3 answers and 1220 words.)

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