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Multiple Choice Quiz
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The private ownership of property, and the use of prices to direct and coordinate economic activity, are characteristics of
A)A market system
B)A command system
C)A factor market
D)A product market
In the circular flow model, businesses
A)demand both products and resources
B)supply both products and resources
C)demand products and supply resources
D)supply products and demand resources
The economist who first used the phrase "invisible hand" was
A)Milton Friedman
B)Karl Marx
C)Adam Smith
D)David Ricardo
Which of the following provides a positive externality?
A)a chocolate bar
B)the public education system
C)a single-family dwelling
D)a forklift
If you agree to buy me dinner in exchange for taking care of your dog over the weekend, this is an example of
B)a monetary exchange
C)the division of labour
In a market system, which goods and services are produced is determined by
A)consumer demand
B)how profitable they are to produce
C)the self interest of both producers and consumers
D)all of the above
A traffic sign would be classified as a
A)private good
B)public good
D)negative externality
Market failure occurs when
A)a competitive market system fails to allocate resources in a way that best satisfies the wants of society
B)a producer fails to deliver a product or service on time
C)a consumer fails to make payments according to the purchase agreement
D)a company declares bankruptcy
If I can get the benefits of publicly provided national defence without paying for it, I would be, according to an economist
A)a thief
B)a monopolist
C)a free rider
D)a capitalist
When the Royal Bank hires fifteen new employees, they participate in
A)consumption expenditures
B)the product market
C)the factor market
D)the retail market
In order to function as money, an item must
A)be approved by the federal government
B)be generally accepted by sellers
C)earn interest
D)require a coincidence of wants
In a market system, who gets how much of the economy's output is decided by
A)the government
B)each person's ability and willingness to pay
C)consumer preferences
D)each person's level of disposable income
The invention of the iPod and other MP3 players significantly decreased the demand for CDs. An economic term describing this is
A)free riding
B)laissez faire
C)negative externality
D)creative destruction
One of the main benefits of specialization is
A)increased competition
B)increased self-sufficiency
C)greater efficiency, resulting in increased total output
D)lower unemployment
The term "dollar votes" means
A)consumer demands in dollars for various products will determine whether or not these products get produced in a market economy.
B)consumers vote for their favourite products over the internet.
C)firms decide how much of a good to produce based on consumer surveys of the good.
D)the amount of money politicians vote to spend on public goods.

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