BYU-Idaho Econ 150 LS Extra Credit Wk 2

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Terms in this set (...)

Pure capitalism is also known as ______ capitalism.
Laissez-faire
Which of the following describe a command system?
Government ownership of most or all resources.
A government-appointed central planning board.
True or false: Communism exhibits all the characteristics of a command system.
True
_______ is a particular set of institutional arrangements and a coordinating mechanism that responds to the economizing problem.
An economic system
An economic system intends to address ______ goods and services are to be produced, ________ they are to be produced, _______ gets what is produced, how to accommodate change and how to promote technological progress.
What
How
Who
True or false: Government owns most the property resources such as land and capital in a market system.
False
Which of the following are the key components of the market system?
Capital; Markets; Prices
An active, but limited government is an example of which market system in modern advanced industrial economies?
Free market system
The five questions that every society must address reflect the reality of _________ resources in a world of ______ wants.
Finite; unlimited
In recent years, new MP3 and digital technologies have started to replace compact disks. This is an example of:
creative destruction
The Wealth of Nations was written by:
Adam Smith
Over the years, many people have benefited from technological innovations and advancements such as the personal computer and medical discoveries. This illustrates which of the following concepts?
Invisible hand
Identify the three virtues of the market system.
Incentives; efficiency; freedom
True or false: The lack of incentives contributed to the economic problems faced by the economies of the former Soviet Union, eastern Europe, and China prior to market reforms.
True
The term "laissez-faire" refers to
keeping the government from interfering in the economy.
The millions of decisions made by households and businesses are highly coordinated with one another by ____ and ____.
Markets; prices
The "invisible hand" refers to firms and resource suppliers, in seeking to further their own interests, promote:
The public or social interest
A ________ (one word) is cited as a natural outgrowth of the sole proprietorship.
Partnership
Human specialization or division of labor contributes to a society's output in which of the following ways?
Specialization fosters learning by doing.
Specialization makes use of differences in ability.
Specialization saves time.
In a(n) _______ (one word or abbreviation) owners bear no personal financial responsibility for the firm's debts and obligations.
Corporation
A ______ is an institution or mechanism that brings buyers and sellers into contact.
Market
Exchange or trade resulting from specialization can and sometimes does occur through ___.
A coincidence of wants; barter.
Which of the following are components of the circular flow model?
Resource market
Product market
Households
Businesses
A ______ proprietorship is a business owned and managed by a single person.
Sole
When every economic unit in a society such as individuals, firms or government attempts to achieve their own particular goal usually requiring delivering something of value to others, this is referred to as:
Self-interest
Under the market system, _____ and _____ coordinate and direct economic activity.
Markets; prices
The product market is the place where :
Businesses sell goods and services and households buy goods services.
In the market system, consumers exercise ____. That is, consumers are in command and spend their income on the goods and services they are most willing and able to buy.
Consumer sovereignty
In descending order of economic freedom, list the four degrees of economic freedom exhibited throughout the world.
Free
Mostly free
Mostly unfree
Repressed
Which of the following would most likely not be an example of a market?
A classroom discussion on the virtues of a competitive market system. A market is anywhere you have at least one buyer and one sellers, whether physically or virtually.
Intellectual property is an extension of property rights through:
Copyrights
Patents
Trademarks
Private property rights, coupled with the freedom to negotiate binding legal _____ enables individuals and businesses to obtain, use, and dispose of property resources as they see fit.
Contracts
Which of the following best describe how goods and services will be produced?
By locating production facilities optimally to hold down production and transportation expenses.
By utilizing the right mix of labor and capital.
Competition among economic units:
Diffuses economic power within the businesses and households that make up the economy.
Implies that producers can enter or leave an industry.
Competition among ______ and _____ diffuses economic power within the economic units that make up the economy.
Sellers
Buyers
The goods and services produced by an economic through ______ can be exchanged for a full range of desired produced by other economic units.
Specialization
Which of the following does not occur in the resource market?
Households produce goods.
Money performs several functions, but first and foremost it is a:
Medium of exchange
Which of the following best illustrates exchange through barter?
Farmer John trades his corn for some of his neighbor's oranges.
According to the circular flow model, households buy the goods and services that businesses make available in the ________ market.
Product
Monies that flow out of businesses to pay for resources are costs to businesses, but they represent which of the following types of flows to households?
Profit income
Wages
*also interest and rent*
A market system decides on what to produce based on:
Total revenue exceeding total costs in the production of a good or service.
Continued economic profit from producing a good or service.
The movement of resources toward and industry that exhibits continued profits from producing a good or service.
Freedom of _____ ensures that entrepreneurs and private businesses are free to obtain and use economic resources to produce their choice of goods and services.
Enterprise
Private ______ rights, coupled with the freedom to negotiate binding legal _____ enables individuals and businesses to obtain, use and dispose of property resources as the see fit.
Property
Contracts
Property rights encourage:
Economic growth
Investment
Property maintenance
Exchange
Innovation
The basis of competition is ____ of ____ exercised in the pursuit of _____.
Freedom; choice; money
In a market economy, goods and services are distributed:
To consumers on the basis of their ability and willingness to pay their existing market price.
The _______ describes a situation faced in command economies in which producers have no reason to adjust production in response to shortages and surpluses in the economy.
Incentive problem
The definition of business success in the command economies of the former Soviet Union, eastern Europe, and China prior to market reforms was based on:
Political savvy
Private individuals and firms, not the government, own most of the property resources such as land and capital in a free _____ system.
Market
Which of the following describes technological advance?
New and improved methods that reduce production and or distribution costs.
The ability to produce better products and processes to replace inferior ones.
The ability of a firm or entrepreneur to gain revenue and economic profit at the expense of rivals by introducing a popular new product.
Which of the following best describe the concept of laissez-faire capitalism?
The role of government is limited to protecting private property.
The role of government is limited to ensuring the appropriate operation of the market system.
Freedom of _________ enables owners to employ or dispose of the property and money as they see fit.
Choice
Households obtain income in the _______ market in order to buy the goods and services that businesses produce in the ________ market.
Resource; product
A person's income depends on which of the following?
The prices commanded by their resources in the resource market.
The quantities of the property and human resources supplied.
Freedom of entry and exit of producers enables the economy to adjust to changes in which of the following areas?
Technology
Resource availability
Consumer tastes
Which of the following is inherent in competition and limits the potential abuse of power?
Diffusion of economic power
Which of the following would be determined in the product market?
The price of a new pair of athletic shoes
In order to serve as money, an item must be generally acceptable to ______ in exchange for their goods and services.
Sellers
The title to an automobile or the deed to a cattle ranch assures a buyer that the seller is the legitimate owner of that property. This is an example of property rights ______.
Facilitating exchange
Which of the following best describe the virtue of efficiency?
The market system promotes the efficient use of resources by guiding them into the production of the goods and services most wanted by society.
The market encourages the development and adoption of new and more efficient production techniques.
Technological improvements or advancements also include new and improved methods that _____ distribution or production costs.
Reduce
Under which of the following does specialization work?
Firm level
Regionally
Individual level
Internationally
Under a market system, only a firm's _______ are subject to business risk.
Owners
The various forms of intellectual property rights discussed in McConnell include ________, ________, and _______.
Copyrights
Trademarks
Patents
Which of the following best describes the reasons that specialization increases the total output society derives from limited resources?
Specialization makes use of differences in ability.
Specialization saves time.
Specialization fosters learning by doing.
Which of the following provide the opportunity and motivation for technological advance?
Freedom of choice, competition, personal reward, and self-interest.
Two or more buyers and two or more sellers acting independently with the freedom to enter and leave markets best describes:
Competition
The ______ problems faced by the command economies of the former Soviet Union, eastern Europe, and China prior to market reforms became more difficult as the economies expanded and as markets became more complex.
Coordination
The goods and services produced by an economic unit through _____ can be exchanged for a full range of desired products produced by other economic units.
Specialization
In the circular flow model, households ____ resources and ____ products.
Sell
Buy
Monies that flow out of businesses to pay for resources are costs to businesses, but they represent which of the following types of flows to households?
Rent
Wages
Interest
Profit income
Product and resources prices in a market system are determined by:
The interaction of buyers and sellers in a market.
Freedom of ______ ensures that entrepreneurs and private businesses are free to obtain and use economic resources to produce their choice of goods and services.
Enterprise
Entrepreneurs will realize _____ if they make wise choices and ____ if they choose poorly.
Profit
Loss
Advanced technology and capital goods are important because
The most productive methods are often the most efficient.
The most direct methods of producing a good or service are often the least efficient.
Choose the options that best summarize the requirements for competition.
Freedom of sellers and buyers to enter or leave markets on the basis of their economic self-interest.
Two or more buyers and two or more sellers acting independently in a particular product or resource market.
Economic growth, investment, innovation, exchange, and maintenance of property are all possible because of ____.
Private property rights
A central planning board sets the division of output between capital and consumer goods in a system.
Command
Entrepreneurs and owners of businesses use part of their ____ in order to accumulate more capital goods.
Profits