Question 1

Private property

Accepted Answer

A)  does everything indicated in the other choices.
B)  encourages owners to maintain or improve their property to preserve or enhance value.
C)  discourages innovation as people are often afraid to risk losing their own property.
D)  discourages cooperation because people don't want to part with what they own.E) All of the above
F) None of the above

Question 2

Answer the question using the following data, which show all available techniques for producing 20 units of a particular commodity.  In view of the indicated resource prices, the economically most efficient production technique(s) is (are) technique(s)

Accepted Answer

A)  1.
B)  2 and 4.
C)  3.
D)  1 and 3.E) B) and C)
F) None of the above

Question 3

One essential trade-off involving business risk in a market system is reflected in which of the following statements?

Accepted Answer

A)  Access to the firm's profits and gains are open only to those who take on the business risk of the firm.
B)  Those who receive guaranteed payments from the firm are also guaranteed a share of the firm's profits.
C)  Those who make bad decisions regarding risk will suffer losses; those who decide wisely will gain profits.
D)  Those who bear the business risk of the firm are guaranteed to always gain profits.E) A) and B)
F) C) and D)

Question 4

One of the most important economic resources is money.

Accepted Answer

A) True 
 B)False

Question 5

If a nation restricts trade with other nations, then the most likely effect is

Accepted Answer

A)  lower prices of goods and services in the nation.
B)  increased specialization of production.
C)  expanded economic wealth of the nation.
D)  consumers in the nation are made worse off.E) All of the above
F) A) and B)

Question 6

Which of the following statements about the right to private ownership is false?

Accepted Answer

A)  It enables individuals to obtain, use, and dispose of land and capital resources as they see fit.
B)  It encourages investment and innovation, and thus fosters economic growth.
C)  It extends to intangibles such as pieces of music and computer programs.
D)  It weakens the incentive to maintain the property that one already owns.E) A) and B)
F) B) and D)

Question 7

Which of the following is assumed to be most limited in scope under a market system?

Accepted Answer

A)  entrepreneurship
B)  self-interest
C)  specialization
D)  governmentE) A) and B)
F) B) and C)

Question 8

Which of the following statements about self-interest in a market system is false?

Accepted Answer

A)  Self-interest applies only to consumers, not to entrepreneurs.
B)  Self-interest of entrepreneurs implies seeking maximum profits or minimum losses.
C)  Self-interest usually motivates an individual to deliver something of value to others.
D)  In a market system, self-interest motivates property owners to try to get the highest rent or price for their property.E) None of the above
F) C) and D)

Question 9

Which of the following is not a typical characteristic of a market system?

Accepted Answer

A)  private property
B)  freedom of enterprise
C)  government ownership of most property resources
D)  competition in product and resource marketsE) A) and B)
F) B) and D)

Question 10

Which of the following best describes the invisible-hand concept?

Accepted Answer

A)  The desires of resource suppliers and producers to further their own self-interest will automatically further the public interest.
B)  The inability to substitute resources creates a conflict between private and public interests and calls for government intervention.
C)  The market system is the best system for overcoming the scarce resources-unlimited wants problem.
D)  Central direction by the government will improve resource allocation in a capitalistic economy.E) B) and D)
F) C) and D)

Question 11

Private property

Accepted Answer

A)  discourages cooperation because people don't want to part with what they own.
B)  discourages innovation, as people are often afraid to risk losing their own property.
C)  encourages owners to maintain or improve their property to preserve or enhance value.
D)  does everything indicated by the other answers.E) C) and D)
F) A) and B)

Question 12

Which of the following characteristics is least unique to a market system?

Accepted Answer

A)  private ownership of property resources
B)  competition among buyers and sellers pursuing monetary returns
C)  the widespread use of money
D)  freedom of enterprise and choiceE) A) and B)
F) All of the above

Question 13

In a market system, self-interest is the motivating force that

Accepted Answer

A)  makes individuals unwilling to deliver anything of value to others.
B)  makes owners of resources always want to use their resources themselves.
C)  leads the economy to chaos and confusion, especially the larger economies.
D)  coordinates and creates consistency in the operations of various parts of the economy.E) None of the above
F) A) and C)

Question 14

The market economy is regarded as "efficient" in that

Accepted Answer

A)  it achieves the lowest rate of unemployment.
B)  it leads to the lowest level of poverty in the society.
C)  it directs resources toward products that the society wants most.
D)  it puts the best people in government positions.E) A) and B)
F) A) and C)

Question 15

Which of the following is true of an economy that operates entirely through central planning?

Accepted Answer

A)  An individual's success in business is based on political savvy rather than economic profitability.
B)  There is relative ease in matching resource allocation to consumer demand by the central planners.
C)  Central planners receive market information and coordinate economic activity through the price mechanism.
D)  The system adapts easily to technological change, because there is a healthy entrepreneurial spirit.E) A) and B)
F) A) and C)

Question 16

The market system is an economic system that

Accepted Answer

A)  produces more consumer goods than capital goods.
B)  produces more capital goods than consumer goods.
C)  gives private individuals the right to own resources used in production.
D)  emphasizes the government's power to control markets and direct economic activity.E) A) and B)
F) A) and C)

Question 17

Copyrights and trademarks are examples of

Accepted Answer

A)  capital goods.
B)  human capital.
C)  property rights.
D)  public goods.E) A) and D)
F) None of the above

Question 18

The guiding function of prices tends to keep resources flowing toward their most highly valued uses.

Accepted Answer

A) True 
 B)False

Question 19

Explain the differences in economic systems between North and South Korea and the economic outcomes of the two systems.

Accepted Answer

North Korea, under the influence of the ...

Question 20

What conditions are necessary for economic competition to exist?

Accepted Answer

Broadly defined, competition requires tw...

Exam 2: The Market System and the Circular Flow

The market system is an economic system that

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What conditions are necessary for economic competition to exist?

Correct AnswerverifiedBroadly defined, competition requires tw...View AnswerShow Answer

Explain the differences in economic systems between North and South Korea and the economic outcomes of the two systems.

Correct AnswerverifiedNorth Korea, under the influence of the ...View AnswerShow Answer

In a market system, self-interest is the motivating force that

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Copyrights and trademarks are examples of

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The market economy is regarded as "efficient" in that

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If a nation restricts trade with other nations, then the most likely effect is

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Private property

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Which of the following statements about the right to private ownership is false?

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Which of the following is not a typical characteristic of a market system?

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One essential trade-off involving business risk in a market system is reflected in which of the following statements?

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Which of the following characteristics is least unique to a market system?

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Answer the question using the following data, which show all available techniques for producing 20 units of a particular commodity. In view of the indicated resource prices, the economically most efficient production technique(s) is (are) technique(s)

Correct AnswerverifiedShow Answer

One of the most important economic resources is money.

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Which of the following is true of an economy that operates entirely through central planning?

Correct AnswerverifiedShow Answer

Which of the following statements about self-interest in a market system is false?

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Which of the following is assumed to be most limited in scope under a market system?

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Private property

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The guiding function of prices tends to keep resources flowing toward their most highly valued uses.

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Which of the following best describes the invisible-hand concept?

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Broadly defined, competition requires tw...
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North Korea, under the influence of the ...
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