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Multiple Choice Quiz
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1
An economic system in which markets are the governing force in day-to-day economic life while government regulates social conditions and provides health care and social programs.
A)democratic state
B)communist state
C)welfare state
D)steady state
2
As economists, we refer to the doctrine that holds that government should leave economic affairs primarily to the market as:
A)capitalism
B)laissez-faire
C)dormez-vous
D)communism
3
A market is:
A)a mechanism through which buyers and sellers interact to set prices and exchange goods and services.
B)a place where goods are traded.
C)both a and b
D)neither a nor b
4
_______ coordinate the decisions of producers and consumers in the market.
A)Ushers
B)Directors
C)Governments
D)Prices
5
______ and ______ provide incentives and disincentives to firms for them to produce the desired goods in an efficient manner.
A)Profits; losses
B)Prices; profits
C)Prices; losses
D)Profits; government
6
Which of the following determine society's point on the production-possibility frontier (PPF)?
A)profits and losses
B)prices and profit
C)tastes and technology
D)tastes and profits
7
_______, in his 1776 work _______, introduced the concept of the invisible hand.
A)Eli Hecksher; The Wealth of Nations
B)Adam Smith; The Wealth of Nations
C)Paul Samuelson; Economics
D)Karl Marx; The Wealth of Nations
8
When different people specialize in the production of different goods, their interactions in the market will lead to _______.
A)anarchy
B)a welfare state
C)capitalism
D)gains from trade
9
The recent growth in the flows of goods and services across national borders is described as:
A)globalization
B)capitalism
C)communism
D)marketism
10
When market players impose costs or benefits on those outside the market _______ arise.
A)externalities
B)internalities
C)public goods
D)none of the above





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