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| 1 | |
The market system is characterized by: |
| | A) | widespread use of government price controls |
| | B) | centralized decision-making |
| | C) | limited use of capital goods |
| | D) | private property rights |
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| 2 | |
Barter: |
| | A) | requires money to overcome the problem of coincidence of wants |
| | B) | is the direct exchange of goods for goods |
| | C) | is a fundamental characteristic of the market system |
| | D) | is generally a more efficient system than a monetary exchange system |
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| 3 | |
Firms will tend to exit an industry if: |
| | A) | they fail to earn an economic profit |
| | B) | the economic resources used by the industry decline in cost |
| | C) | they fail to form strategic alliances with other firms in the industry |
| | D) | demand for the good or service fails to increase |
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| 4 | |
A firm will earn an economic profit if: |
| | A) | its total sales revenue equals the cost of labor and raw materials |
| | B) | it produces its output utilizing the least-cost production method |
| | C) | it is regulated by government |
| | D) | its total sales revenue exceeds the sum of all its economic costs |
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| 5 | |
A firm can produce a single unit of output by combining labor and capital in any of the combinations shown in the following table. Labor costs $10 per unit and capital costs $5 per unit.
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Refer to the table. Which technique is the most efficient way of producing the output? |
| | A) | A |
| | B) | B |
| | C) | C |
| | D) | D |
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| 6 | |
A firm can produce a single unit of output by combining labor and capital in any of the combinations shown in the following table. Labor costs $2 per unit and capital costs $4 per unit.
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Refer to the table. Which technique is the most efficient way of producing the output? |
| | A) | A |
| | B) | B |
| | C) | C |
| | D) | D |
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| 7 | |
The term "consumer sovereignty" means: |
| | A) | there are many independently acting consumers in society |
| | B) | firms' choices are constrained by the government through consumer voting blocs |
| | C) | consumer choices ultimately determine which goods and services are produced |
| | D) | consumers have freedom of choice |
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| 8 | |
"The pursuit of self-interest automatically promotes the social interest." This concept is known as: |
| | A) | consumer sovereignty |
| | B) | the rationing function of prices |
| | C) | the invisible hand |
| | D) | the guiding function of prices |
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| 9 | |
In the circular flow diagram, firms: |
| | A) | receive revenue and supply resources in the resource market |
| | B) | receive revenue and demand resources in the product market |
| | C) | incur costs and demand resources in the resource market |
| | D) | incur costs and supply goods and services in the product market |
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| 10 | |
Compared to a command system, economists typically favor a competitive market system because it promotes: |
| | A) | efficiency |
| | B) | an active government |
| | C) | limited use of capital goods |
| | D) | high economic profits |
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| 11 | |
In a market system, economic profits: |
| | A) | create an "incentive problem" |
| | B) | respond inversely to changes in demand |
| | C) | direct resources to their most highly valued use |
| | D) | are in direct conflict with the goal of consumer sovereignty |
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