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Which of the following is a distinguishing feature of a market system
wide-spread ownership of capital
Of the following countries, the one that best exhibits the characteristics of a market economy is:
An economic system
is a particular set of institutional arrangements and a coordinating mechanism used to respond to the economizing problem
The term laissez-faire suggests that:
government should not interfere with the operation of the economy
Economic systems differ according to what two main characteristics
Who owns the factors of production, and the methods used to coordinate economic activity
Which of the following is NOT a characteristic of the market system?
Government ownership of the major industries
Broadly defined, competition involves:
independently acting buyers and sellers and freedom to enter or leave markets
Specialization--the division of labor--enhances productivity and efficiency by:
all of the above means
Specialization in production is economically beneficial primarily because it:
permits the production of a larger output with fixed amounts of resources.
The coincidence-of-wants problem associated with barter refers to the fact that:
for exchange to occur each seller must have a product that some buyer wants.
The use of money contributes to economic efficiency because:
it promotes specialization by overcoming the problems with barter.
Which of the following is one of the Five Fundamental Questions?
What goods and services will be produced?
If competitive industry Z is making substantial economic profit, output will:
expand in industry Z, as more resources will move to that industry.
From society's point of view the economic function of profits and losses is to:
reallocate resources from less desired to more desired uses.
In a market economy a significant change in consumers' desire for product X will:
do all of the above
Economic profits in an industry suggest the industry:
should be larger to better satisfy consumers' desire for the product.
Economic profits and losses:
are essential to the reallocation of resources from less desired goods to more desired goods.
If consumer desire for product X increases, all of the following will occur except:
a decrease in the quantity of resources employed in industry X.
An increase in consumer desire for strawberries is most likely to:
increase the number of strawberry pickers needed by farmers
If competitive industry Y is incurring substantial losses, output will:
contract as resources move away from industry Y.
If a competitive industry is neither expanding nor contracting, we would expect:
economic profits to be zero
Suppose industry A is realizing substantial economic profit. Which of the following best describes what will happen in this competitive market?
Firms will enter the industry and output will rise
The competitive market system:
encourages innovation because successful innovators are rewarded with economic profits
In a market economy the distribution of output will be determined primarily by:
the quantities and prices of the resources that households supply.
The most efficient combination of resources in producing any output is the combination that:
can be obtained for the smallest money outlay
In a competitive market economy firms will select the least-cost production technique because:
to do so will maximize the firms profits
The market system's answer to the fundamental question "What will be produced?" is essentially:
"Goods and services that are profitable."
The market system's answer to the fundamental question "How will the goods and services be produced?" is essentially:
"At least-cost production."
The market system's answer to the fundamental question "Who will get the goods and services?" is essentially:
"Those willing and able to pay for them."
The market system's answer to the fundamental question "how will the system accommodate change?" is essentially:
"Through the guiding function of prices and the incentive function of profits"
The market system's answer to the fundamental question "How will the system promote progress?" is essentially:
"Through the profit potential that encourages development of new technology."
The advent of DVDs threatens to eventually demolish the market for videocassettes. This is an example of:
Consumer sovereignty refers to the
idea that the decisions of producers and resource suppliers with respect to the kinds and amounts of good produced must be appropriate to consumer demands.
The dollar votes of consumers ultimately determine the composition of output and the allocation of resources in a market economy. This statement best describes the concept of:
Which of the following best describes the invisible-hand concept?
the desires of resource suppliers and producers to further their own self-interest will automatically further the public interest.
The invisible hand refers to the:
notion that, under competition, decisions motivated by self-interest promote the social interest.
The invisible-hand concept suggests that:
assuming competition, private and public interest will coincide.
The invisible-hand concept suggests that:
when firms maximize their profits, society's output will also be maximized.
Two major virtues of the market system are that it:
allocates resources efficiently and allows economic freedom.
The coordination problem in the centrally planned economies refers to the idea that:
planners had to direct required inputs to each enterprise
"Under central planning, some group has to decide how to get the necessary inputs produced in the right amounts and delivered to the right places at the right time. This is a nearly impossible task without markets and profits." This quotation best identifies the:
coordination problem under central planning
"Because the outputs of many industries are the inputs to other industries, the failure of any single industry to fulfill the output qualities specified in the central plan caused a chain-reaction of adverse repercussions on production." This quotation best identifies the:
coordination problem under Central planning.
The incentive problem under communist central planning refers to the idea that:
workers, managers, and entrepreneurs could not personally gain by responding to shortages or surpluses or by introducing new and improved products.
Suppose that an individual sees a tremendous opportunity to produce and sell a new product, but dismisses the idea because there is no way to exploit this opportunity for personal gain. This situation best identifies the:
ncentive problem under communist central planning.
Shortages and unmet demand provide opportunities for individuals and firms to profit under capitalism, but they present no such opportunities under central planning. This reality represents central planning's:
Innovation lagged in the centrally planned economies because:
enterprises resisted innovation in fear that their production targets would be raised.
The fact that the major indicator of enterprise success in the Soviet Union and pre-reform China was the quantity of output implied that:
product quality was neglected.
Enterprise managers and workers in the Soviet Union often resisted innovations in production methods because:
production targets were often increased when innovation occurred.
if products were in short or surplus supply in the Soviet Union:
producers would not react because no price or profit signals occurred.
In terms of circular flow diagram, businesses obtain revenue through the____market and make expenditures in the____market.
In 1975 McDonald's introduced its Egg McMuffin breakfast sandwich, which remains popular and profitable today. This longevity illustrates the idea of:
In 1996 McDonald's introduced its Arch Deluxe hamburger, which failed to catch on with the public and was subsequently dropped from the menu. This failure illustrates the idea of:
In Class Abell was talking about some of the problems with the Command System, he went on to compare two countries...who were they?
United States, Soviet Union
In reference to the Cold War, Abell compared the two countries engaged to what?
Two bullies on a playground
Abell was talking about the shortcomings of the Soviet Union, one of the issues was the bottlenecking of certain goods...what was the product that was in shortage to the point there was a black market for it?
16 penny nails
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