59 terms

Econ chapter 2

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1. A basic characteristic of a command system is that:
government owns most economic resources.
The private ownership of property resources and use of prices to direct and coordinate economic activity is characteristic of:
a market system.
Consumer sovereignty and "dollar votes" are most related to which fundamental question about a competitive market system?
What goods and services will be produced?
The economy of North Korea would best be classified as:
a command system.
Which statement best describes a command economy?
The production and allocation of goods and services is determined primarily through government.
Advantages of specialization do not include:
less interdependence
Consumers express self-interest when they:
seek the lowest price for a product.
Which is a major feature of the market system?
the right to own private property and control resource use
Economic systems differ according to what two main characteristics?
Ownership of resources, and methods of coordinating economic activity.
Which condition will encourage competition?
the freedom of sellers and buyers to enter or exit an industry
Consider a barter situation where you have pens and you want pencils. To achieve your objective there must be a(n):
coincidence of wants.
A competitive economy assumes the existence in each industry of a:
large number of small firms facing a large number of small buyers.
Specialization and trade are beneficial to society because:
a division of labor lowers prices for products.
the output of economic goods may be increased with no increase in resources.
scarce resources are utilized more efficiently.
three of the Four Fundamental Questions?
How should the system promote progress?
Who is to receive the output of the system?
How will goods and services be produced?
A durable consumer good is expected to last for at least how long?
3 years.
Which of the following is not considered a consumer expenditure?
Purchases of houses
In the circular flow model, households:
buy products and sell resources.
Which of the following would be primarily determined in the resource market?
the wage rates for electricians
Approximately what percentage of U.S. firms are sole proprietorships?
72 percent.
U.S. corporations generate approximately what percentage of total sales revenue?
84 percent.
The circular flow model shows that the goods and services produced by business firms are sold through:
product markets
Over half of U.S. consumer expenditures are for what?
Services.
The simple circular flow model shows that workers, entrepreneurs, and the owners of land and capital offer their services through:
resource markets.
In the simple circular flow model:
households are sellers of resources and demanders of products.
Which condition will encourage competition?
the freedom of sellers and buyers to enter or exit an industry
What to produce in a market economy is ultimately determined by the:
workers' technical skills.
All accurately describe a market economy except:
government establishes maximum and minimum prices for most goods and services.
By free enterprise, we mean that:
individuals are free to produce those products that government agencies determine can be produced profitably.
In product markets:
businesses sell goods and services to households.
Which is assumed to be most limited in scope under a market system?
government
Within a market economy, some industries may be declining while other industries may be expanding. This indicates that:
resources are being reallocated.
A market system is best characterized by:
the private production of most capital goods.
In a circular flow model consisting of the household sector, the business sector, product markets, and resource markets:
businesses are sellers of products.
The maximization of profit and the minimization of losses is the primary factor affecting the economic decision making of:
entrepreneurs.
From society's point of view, the economic function of profits is to:
direct resources in response to changes in the economy.
Competition denotes a condition where:
there are many independent buyers and sellers in a market.
A basic characteristic of a command system is that:
government owns most economic resources.
The simple circular flow model shows that workers, entrepreneurs, and the owners of land and capital offer their services through:
resource markets.
If goods and services flow clockwise in a circular economic flow diagram, then consumption expenditures flow:
counterclockwise and revenues flow counterclockwise.
The circular flow model:
illustrates the interdependence of businesses and consumers.
Are you in the resource market? Explain in a few sentences.
Yes, I am in the resource market. Although I do not have job, I am would be willing to sell my resources of entreprenurial ability. However, what governments and businesses control is the amount of money I would get with my entreprenurial ability. If I wish for the salary to be x amount of dollars and it is too high, then I would still be in the resource market but only be used by businesses and in the product market if I was to negotiate and resolve how much I money I wanted to recieve per every hour/day/week etc.
Which of the following does not explain why specialization increases output?
Specialization promotes self-sufficiency and independence.
Which of the following government interventions most closely promotes a free market?
The government mandates that calorie counts are listed on restaurant menus.
What kind of economic system is reflected in your household: command or market? Explain in a few sentences with some examples.
In my household, I live under a command system. My mother and father (mostly mom) is the boss and my brother and I have listen and do whatever chores she tells us to do. She and my father bought the house and most* of the items inside of it (food, clothes, gas for car, etc) therefore she claims the right to them all. Decisions are made through a central econ plan (planning group) and that is when my mother and father decide how many chores and rules they can give us before we rebel.
In "Francisco's Money Speech," by Ayn Rand, the author argues that money is
a reflection of a person's greed
If Justin Bieber tickets are $100 each, and there are only 30,000 seats, but 35,000 people would be willing to spend that amount of money, what does this tell us about price in the market system.
It is too low
The process in which workers select specialized tasks to make a product is referred to as:
a coincidence of wants.
division of labor.
24. Specialization and trade are beneficial to society because:
the output of economic goods may be increased with no increase in resources.
scarce resources are utilized more efficiently.
a division of labor lowers prices for products.
Place the following countries in order from most market-based to least market-based. (Most market-based on top)
Hong Kong

United States

France

North Korea
The term consumer sovereignty means that:
what is produced is ultimately determined by what consumers buy.
The market system is said to be characterized by "consumer sovereignty." This is because:
of the role of consumers in determining what goods are produced.
In a market economy, the money incomes of individuals depend primarily upon:
the value and amounts of the productive resources the individuals possess.
Which statement best describes a command economy?
The production and allocation of goods and services is determined primarily through government.
Markets in which firms sell their output of goods and services are called:
product markets.
In a market system, well-defined property rights are important because they:
encourage economic activity.
In the circular flow model, households:
buy products and sell resources.
Which statement best describes a capitalist economy?
Society determines production and the allocation of goods and services only through markets.
Choose all of the following that reflect a market-based system.
Ryan doesn't have a job. He would accept a job as a waiter if he could be guaranteed at least $15 an hour, but no restaurant is willing to accept his conditions.

50 acres of Trumbull woods were recently purchased by Magee's family. The land was unprotected, and for generations, children used to frolic and play in the woods. Her family plans to open up a series of liquor stores, bars, pool halls and gambling establishments. No one else was willing to pay more for the land than her family was.


Mr. Hoefle has to mow his own lawn. He offered to pay $5 to neighborhood kids, but no one took him up on it.
How do workers typically express self-interest?
by seeking jobs with the best combination of wages and benefits