Question 1

In a market system,

Accepted Answer

A)   ﬁrm owners and employees share business risk more or less equally.
B)   a ﬁrm's employees and suppliers are largely shielded from risk, relative to business owners.
C)   employees and suppliers face the greatest risks, because ﬁrms can shut down without notice and leave them unpaid.
D)   a ﬁrm's owners are largely shielded from risk because they can walk away from the business at any time.E) A) and B)
F) All of the above

Question 2

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) A) and B)
F) A) and C)

Question 3

In the circular ﬂow model of the market system, business's major role is to

Accepted Answer

A)   buy products and resources.
B)   sell products and resources.
C)   buy products and sell resources.
D)   sell products and buy resources.E) A) and D)
F) None of the above

Question 4

Economic eﬃciency entails producing a certain output with the minimum number of units of inputs.

Accepted Answer

A) True 
 B)False

Question 5

Command systems are also known as

Accepted Answer

A)   market systems.
B)   pure capitalism.
C)   laissez-faire capitalism.
D)   communism.E) A) and D)
F) B) and D)

Question 6

The invisible hand concept suggests that

Accepted Answer

A)   market failures imply the need for a national economic plan.
B)   big businesses are inherently more eﬃcient than small businesses.
C)   the competitiveness of a capitalistic market economy invariably diminishes over time.
D)   assuming competition, private and public interests will coincide.E) B) and C)
F) B) and D)

Question 7

The market system's answer to the fundamental question "How will the goods and services be produced?" is essentially

Accepted Answer

A)   "With as much machinery as possible."
B)   "Using the latest technology."
C)   "By exploiting labor."
D)   "In ways that minimize the cost per unit of output."E) A) and D)
F) B) and C)

Question 8

In a competitive market economy, ﬁrms and resource suppliers seeking to further their own self-interest
will end up, as though guided by an invisible hand, promoting the public interest.

Accepted Answer

A) True 
 B)False

Question 9

If people tried to produce most of what they need on their own, then this would lead to a more eﬃcient
use of the economy's resources.

Accepted Answer

A) True 
 B)False

Question 10

Explain the main characteristics of a corporation.

Accepted Answer

A corporation is an independent legal en...

Question 11

"Consumer sovereignty" means that

Accepted Answer

A)   buyers can dictate the prices at which goods and services will be offered.
B)   advertising is ineffective because consumers already know what they want.
C)   buyers control the quality of goods and services through regulatory agencies.
D)   buyers determine what will be produced based on their "dollar votes" for the goods and services offered by sellers.E) B) and D)
F) B) and C)

Question 12

(Consider This)  The Bitcoin currency is issued by

Accepted Answer

A)   the United States Federal Reserve.
B)   the United States Treasury.
C)   the World Bank.
D)   no government of any country.E) C) and D)
F) B) and D)

Question 13

"Because the outputs of many industries are the inputs to other industries, the failure of any single industry to fulﬁl the output quantities speciﬁed in the central plan caused a chain reaction of adverse
Repercussions on production." This quotation best identiﬁes the

Accepted Answer

A)   incentive problem under central planning.
B)   self-suﬃciency dilemma under communism.
C)   resource overcommitment problem under communism.
D)   coordination problem under central planning.E) A) and D)
F) B) and D)

Question 14

What are the Five Fundamental Questions that every economy must answer?

Accepted Answer

There are ﬁve fundamental questions that...

Question 15

Suppose a ?rm can produce 70 units of a product, Zenia, by combining labor, land, capital, and entrepreneurial ability, as in the four alternative techniques shown in the table below. Assume further
That the ?rm can hire labor at $3 per unit, land at $3 per unit, capital at $6 per unit, and entrepreneurship
At $9 per unit.
                                            Techniques~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Techniques                                            Techniques 
 ABCD Labor 41065 Land 5333 Capital 5244 Entrepreneurship 1111\begin{array} { | l | c | c | c | c | } \hline & A & B & C & D \\hline 	ext { Labor } & 4 & 10 & 6 & 5 \\hline 	ext { Land } & 5 & 3 & 3 & 3 \\hline 	ext { Capital } & 5 & 2 & 4 & 4 \\hline 	ext { Entrepreneurship } & 1 & 1 & 1 & 1 \\hline\end{array} Labor  Land  Capital  Entrepreneurship ​A4551​B10321​C6341​D5341​​  Refer to the provided table. Which technique is the most economically e?cient way of producing Zenia?

Accepted Answer

A)   A
B)   B
C)   C
D)   D E) None of the above
F) B) and C)

Question 16

(Consider This) Low-cost production is not important for Bitcoin miners since Bitcoin is intangible and
exists only in cyberspace.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following does not illustrate the idea of creative destruction?

Accepted Answer

A)   Digital downloads have shrunk the market for CDs and DVDs.
B)   Online retail sales have increased, while brick-and-mortar sales have slowed down.
C)   The opening of a new mall reduces the traﬃc in another mall.
D)   A ﬁrm has to destroy some of the expired products in its inventory.E) B) and C)
F) All of the above

Question 18

Which of the following best illustrates the circular ﬂow model in action?

Accepted Answer

A)   Bobbie goes to work and builds cars; she uses the income she receives to buy food at the grocery store.
B)   Evan buys a new couch; the owner of the furniture store uses some of the money from the sale to pay her supplier and uses the rest to take her family out to dinner.
C)   Boeing experiences a surge in orders for new airplanes, prompting the company to hire more workers.
D)   All of these answers illustrate the workings of the circular ﬂow model.E) A) and D)
F) A) and B)

Question 19

Households and businesses are

Accepted Answer

A)   both buyers in the resource market.
B)   both sellers in the product market.
C)   sellers in the resource and product markets respectively.
D)   sellers in the product and resource markets respectively.E) C) and D)
F) B) and C)

Question 20

(Last Word)  Which of the following helps explain why the economy of Venezuela has collapsed?

Accepted Answer

A)   increased oil production due to government nationalization of the industry
B)   government price controls that increase competition among small businesses
C)   a substantial crackdown on corruption caused many companies to be put out of business
D)   hyperinﬂation caused by printing money to pay for government spendingE) B) and D)
F) B) and C)

Exam 2: The Market System and the Circular Flow

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

Correct Answer
verified

In a market system,

Correct Answer
verified

(Consider This) The Bitcoin currency is issued by

Correct Answer
verified

Which of the following best illustrates the circular ﬂow model in action?

Correct Answer
verified

(Consider This) Low-cost production is not important for Bitcoin miners since Bitcoin is intangible and exists only in cyberspace.

Correct Answer
verified

The market system's answer to the fundamental question "How will the goods and services be produced?" is essentially

Correct Answer
verified

In the circular ﬂow model of the market system, business's major role is to

Correct Answer
verified

Economic eﬃciency entails producing a certain output with the minimum number of units of inputs.

Correct Answer
verified

Correct Answer
verified

If people tried to produce most of what they need on their own, then this would lead to a more eﬃcient use of the economy's resources.

Correct Answer
verified

"Because the outputs of many industries are the inputs to other industries, the failure of any single industry to fulﬁl the output quantities speciﬁed in the central plan caused a chain reaction of adverse Repercussions on production." This quotation best identiﬁes the

Correct Answer
verified

What are the Five Fundamental Questions that every economy must answer?

Correct Answer
verified
There are ﬁve fundamental questions that...
View Answer

The invisible hand concept suggests that

Correct Answer
verified

Households and businesses are

Correct Answer
verified

Explain the main characteristics of a corporation.

Correct Answer
verified
A corporation is an independent legal en...
View Answer

Command systems are also known as

Correct Answer
verified

"Consumer sovereignty" means that

Correct Answer
verified

Which of the following does not illustrate the idea of creative destruction?

Correct Answer
verified

In a competitive market economy, ﬁrms and resource suppliers seeking to further their own self-interest will end up, as though guided by an invisible hand, promoting the public interest.

Correct Answer
verified

(Last Word) Which of the following helps explain why the economy of Venezuela has collapsed?

Correct Answer
verified

Exam 2: The Market System and the Circular Flow

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

Correct AnswerverifiedShow Answer

In a market system,

Correct AnswerverifiedShow Answer

(Consider This) The Bitcoin currency is issued by

Correct AnswerverifiedShow Answer

Which of the following best illustrates the circular ﬂow model in action?

Correct AnswerverifiedShow Answer

(Consider This) Low-cost production is not important for Bitcoin miners since Bitcoin is intangible and exists only in cyberspace.

Correct AnswerverifiedShow Answer

The market system's answer to the fundamental question "How will the goods and services be produced?" is essentially

Correct AnswerverifiedShow Answer

In the circular ﬂow model of the market system, business's major role is to

Correct AnswerverifiedShow Answer

Economic eﬃciency entails producing a certain output with the minimum number of units of inputs.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If people tried to produce most of what they need on their own, then this would lead to a more eﬃcient use of the economy's resources.

Correct AnswerverifiedShow Answer

"Because the outputs of many industries are the inputs to other industries, the failure of any single industry to fulﬁl the output quantities speciﬁed in the central plan caused a chain reaction of adverse Repercussions on production." This quotation best identiﬁes the

Correct AnswerverifiedShow Answer

What are the Five Fundamental Questions that every economy must answer?

Correct AnswerverifiedThere are ﬁve fundamental questions that...View AnswerShow Answer

The invisible hand concept suggests that

Correct AnswerverifiedShow Answer

Households and businesses are

Correct AnswerverifiedShow Answer

Explain the main characteristics of a corporation.

Correct AnswerverifiedA corporation is an independent legal en...View AnswerShow Answer

Command systems are also known as

Correct AnswerverifiedShow Answer

"Consumer sovereignty" means that

Correct AnswerverifiedShow Answer

Which of the following does not illustrate the idea of creative destruction?

Correct AnswerverifiedShow Answer

In a competitive market economy, ﬁrms and resource suppliers seeking to further their own self-interest will end up, as though guided by an invisible hand, promoting the public interest.

Correct AnswerverifiedShow Answer

(Last Word) Which of the following helps explain why the economy of Venezuela has collapsed?

Correct AnswerverifiedShow Answer

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There are ﬁve fundamental questions that...
View Answer

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A corporation is an independent legal en...
View Answer

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