Kelani Economics test one chp 3,4,5

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C) It provides an incentive either to be a member of government and thus help determine the allocation rules or to perform according to government dictates.

If society's scarce resources are allocated using a government scheme, which of the following is most likely to result? A). Only those who circumvent the rules will prosper.; B). The government will always guarantee that no one will have to do without.; C). It provides an incentive either to be a member of government and thus help determine the allocation rules or to perform according to government dictates. D). Under the government scheme, some will have to do without, but the government guarantees that resource allocations are always fair.; E). There are huge incentives to improve production and efficiency, and the economy will grow rapidly.

none are fair in the sense that everyone gets the goods and services.

According to the text, of the allocation mechanisms discussed,

to become part of the government.

According to the text, the incentives created by the government allocation mechanism include...

makes possible the exchange of goods and services between buyers and sellers.

A market

resources are allocated to where they are most highly valued.

The market system ensures that

E) All of these

Which of the following is an example of a market? A) The exchange of votes and benefits by voters and politicians; B) The exchange of shares of stock; C) Sales and purchases of illegal drugs; D). The exchange of a particular good at many different locations; E) All of these

can be organized either loosely or formally.

Markets can be organized...

facilitate the exchange of goods and services between buyers and sellers.

In general, the main purpose of markets is to

False its called "Barter"

The exchange of goods and services without the use of money is called "over-the-counter exchange."

False (Specific location or store)

A market is always a specific location or store.

purchasing with money.

Barter is not involved in..

A market arises when buyers and sellers exchange a well-defined good or service.

Which of the following is the best way to describe the term market as used by economists?

A double coincidence of wants

Which of the following must happen in order for barter to occur?

a decrease in the demand for lettuce.

A boycott of lettuce would, if effective, cause

can be caused by an increase in the popularity of the sport.

A change in the quantity demanded of skis is a movement along the demand curve for skis. In contrast, a change in demand for skis

E) will cause a smaller quantity of watermelons to be demanded.

Assume the demand for watermelons is downward sloping. An increase in price from $2 per pound to $3 per pound

South Korea.

During the 1990s, many countries turned from government-run economies to market economies, but one that did not do so is ...(S. Korea? China? Russia? Romania? Poland?)

moved toward equilibrium.

When Russian government price controls were lifted during the 1990s, the price of clothing

a shortage of eggs.

In China, the government price ceiling for eggs causes

the price where Quantity demanded equals Quantity supplied

The equilibrium price is

The quantity represented for both quantity demanded and supplied.

The equilibrium quantity is

A shortage develops and the price increases.

When quantity demanded is higher than quantity supplied...

A surplus develops and the price decreases.

When Quantity supplied in greater than demanded...

the national economy.

Macroeconomists tend to focus on

False. (National economy implies world trade is not a sector)

The major sectors that make up any national economy are households, businesses, and world trade.

demand and supply.

According to the text, the point on its PPC that a society will choose will be determined by

be used in activities where they are more highly valued.

Resources that were once used in a failing business will, according to the text,

consumer tastes for meals may have declined.

According to the figure above, as represented by the shift from D1 to D2,

when consumers change their preferences, the producers respond.

According to the figure above, the shift of demand from D1 to D2 illustrates that

guides resources to their highest-valued use.

According to the text, Adam Smith described the flow of resources in a market economy as an invisible hand that reaches out and

the size of his or her money income.

A consumer's ability to purchase goods and services depends on

True (a family does not always constitute a household.)

A household can consist of a family, but a family does not always constitute a household.

True (holding joint title to their condominium )

An unmarried couple holding joint title to their condominium constitutes a household.

consumption spending.

The largest single component of total spending in the U.S. economy is

rose.

Between 1959 and 2002, household expenditures per year in the United States

a low per capita income.

The World Bank classifies nations as less developed when they have

$760.

A country is considered to be a low-income economy when its per capita income is below

Canada, Mexico, and the major industrial powers.

United States trade is concentrated with which countries?

Another country buys goods from the U.S.

A U.S. export occurs when

False (developing countries outnumber industrialised countries)

Industrial countries greatly outnumber developing countries.

False. Most U.S. trade is concentrated with industrialised nations.

Most U.S. trade is concentrated with Mexico and less developed countries.

compensation for entrepreneurial work.

In economics, profit is defined as

net exports are positive.

A trade surplus occurs when

to maximize their profit, entrepreneurs have to provide the goods consumers want and are able to buy at the lowest possible cost.

Resources are used in their most efficient manner in a market system because

in a market economy, consumers independently following their own interests somehow arrive at efficient allocations.

When economists refer to the invisible hand, they mean that

the existence of private property rights.

All of the following are used to justify intervention of the government in the private economy except: A) market imperfections.; B) positive externalities.; C) the existence of private property rights.; D) public goods.; E) incentives to free-ride on others.

True. (because economic efficiency is not achieved)

In a market system, imperfect information, externalities, and public goods are often referred to as market failures because economic efficiency is not achieved.

Information about the quality of a used car is not perfect.

What is the reason why a car purchased off the new-car lot one day will have a significantly lower value the next day?

ocean fish stocks are overfished.

According to the text, there is no practical way to establish ownership rights of ocean fish stocks. As a result,

Government agencies are established to maintain the national defense. (the national defence is a public good/ service)

According to the text, people call on the government to protect them against periods of economic ill health and to minimize the damaging effects of business cycles. The results are all except which of the following?: A) Government agencies are established to control the money supply.; B) Government agencies are established to control important parts of the economy.; C) Government-financed programs are implemented to offset some of the losses that result during bad economic times.; D) The U.S. Congress requires that the government provide economic growth and minimize unemployment.; E) Government agencies are established to maintain the national defense.

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