Wk 1 Practice Ch 2, The Market System and the Circular Flow

A  central planning

B  capital accumulation

C  technological destruction

D  creative destruction

A  Lack of investment. Poorly educated and trained labor force

B  Coordination problems. Incentive problems

C  Coordination problems Poorly educated and trained labor force

D  Lack of investment. Incentive problems

A  household interests only

B  government interests

C  foreign interests

D  public or social interests

A  Conventional fruit profits will fall. Organic fruit profits will rise.

B  Organic fruit prices will fall. Conventional fruit profits will fall.

C  Organic fruit profits will rise. Conventional fruit prices will rise.

D  Organic fruit prices will fall. Conventional fruit prices will rise.

A  Those who are willing to wait for the goods and services. Those who are willing and able to pay for the goods and services

B  Those who are willing to wait for the goods and services. Those who have sufficient income and want to spend money on a particular good

C  Those who are willing to wait for the goods and services. Those who the government says should receive the goods and services

D  Those who have sufficient income and want to spend money on a particular good. Those who are willing and able to pay for the goods and services

A  creative destruction

B  capital deterioration

C  central planning

D  capital accumulation

A  By using cost-maximizing production methods. By utilizing a level of labor equal to the level of capital available to a firm

B  By locating production facilities optimally to hold down production and transportation expenses. By utilizing a level of labor equal to the level of capital available to a firm

C  By utilizing the right mix of labor and capital. By locating production facilities optimally to hold down production and transportation expenses

D  By using cost-maximizing production methods. By utilizing the right mix of labor and capital

A  Buyers want less juice and more milk. Producers increase spending only on juice.

B  Buyers want more juice and less milk. Producers increase spending only on juice.

C  Buyers want less juice and milk. Producers increase spending on juice and milk.

D  Buyers want the same amount of juice and milk. Producers increase spending on juice and milk.

A  to the government for redistribution to the people who can afford to pay for them

B  to consumers on the basis of their ability and willingness to pay the existing market price

C  according to the needs of society as determined by the government

D  equally among all consumers

A  True

B  False

A  that minimize the cost per unit of output

B  that averages the cost per unit of output

C  where the costs per unit of output are equal to the capital investment

A  High production costs. Competition among firms

B  High production costs. Dollar votes

C  Dollar votes . Consumer sovereignty

D  Consumer sovereignty. Competition among firms

A  a monopoly

B  self-interest

C  freedom of enterprise

D  competition

A  Who will get the goods and services?
How will the prices of goods and services be determined?
What will be the price of goods and services produced?
How will the system promote progress?

B  What goods and services will be produced?
Who will get the goods and services?
How will the system accommodate change?
How will the goods and services be produced?
How will the system promote progress?

C  How will the system accommodate change?
How will the prices of goods and services be determined?
What will be the price of goods and services produced?
Who will get the goods and services?

D  How will the system accommodate change?
How will the goods and services be produced?
How will the prices of goods and services be determined?
What will be the price of goods and services produced?

A  Specialization

B  Allocation

C  Materialization

D  Innovation

A  Exclusive use of technology as it is often changing and results in continuous creative destruction

B  Exclusive use of labor, only when capital and technology exceed the cost of labor

C  Using a combination of labor, capital and technology

D  Exclusive use of capital, but only when labor exceeds the cost of capital

A  infinite… unlimited….

B  infinite… limited….

C  scarce… unlimited….

D  scarce… limited….

A  Command system

B  Centrally planned system

C  Modern market system

D  Price-controlled system

A  bartered good

B  necessary evil

C  medium of exchange

D  market

E  resource

A  specialization

B  capital intensiveness

C  labor intensiveness

D  competition

A  The most productive methods are often the least efficient. The new technology can enhance the productivity of workers.

B  The new technology can enhance the productivity of workers. The most direct methods of producing a good or service are often the most efficient.

C  The new technology can enhance the productivity of workers. The most direct methods of producing a good or service are often the least efficient.

D  The most productive methods are often the least efficient. The most direct methods of producing a good or service are often the most efficient.

A  price floors and price ceilings

B  markets and prices

C  utility and competition

D  the public sector and the private sector

A  Mutually exclusive economic transactions. Two or more buyers and two or more sellers acting independently in a particular market

B  Freedom of sellers and buyers to enter or leave markets. Mutually exclusive economic transactions.

C  Mutually exclusive economic transactions. Two or more buyers and two or more sellers acting dependently in a particular market

D  Two or more buyers and two or more sellers acting independently in a particular market. Freedom of sellers and buyers to enter or leave markets

A  Government

B  Society

C  Firms

D  Individuals

A  A market system in which the role of government is to correct market failures. A market system in which the role of government is unlimited

B  A market system in which the role of government is to correct market failures. A market system in which only mutually beneficial economic transactions are completed

C  A market system in which the role of government is limited to protecting private property. A market system in which only mutually beneficial economic transactions are completed

D  A market system in which the role of government is limited to protecting private property. A market system in which the role of government is unlimited

A  owners 

B  buyers

C  negotiators

D  lenders

A  centrally-planned

B  socialist

C  populist

D  Market

A  A command system

B  An economic system

C  A market system

D  A democratic system

A  Firms producing what consumers demand
Firms and households acting in their own self-interest

B  A government-appointed central planning board
Firms and households acting in their own self-interest

C  Government ownership of most or all resources.
A government-appointed central planning board.

D  Government ownership of most or all resources
Firms and households acting in their own self-interest

A  limiting the government’s interference in the economy.

B  mixed market or mixed capitalism.

C  allowing the government to significantly interfere in the economy.

D  the government as the dominant force in the economy.

A  capital accumulators

B  entrepreneurs

C  lien holders

D  residual claimants

A  freedom of choice

B  trade

C  self-interest

D  greed

A  Property rights

B  Self-interest

C  Competition

D  Freedom of enterprise

E  Freedom of choice

A  A market system discourages competition.

B  A market system discourages innovation.

C  A market system is characterized by government ownership of sources of production.

D  A market system is a combination of centralized government initiatives and decentralized actions taken by firms.

A  The government owns most property resources.
A central planning board makes all economic decisions concerning resources.

B  The division of output between capital and consumer goods is decided by market forces.
Firms produce according to the demands of consumers.

C  A central planning board makes all economic decisions concerning resources.
Firms produce according to the demands of consumers.

D  The division of output between capital and consumer goods is decided by market forces.
The government owns most property resources.

A  Market capitalism

B  Planned capitalism

C  Command capitalism

D  Laissez-faire capitalism

A  Judicial

B  political

C  democratic

D  economic

A  Government

B  Public

C  Private

D  Central board