Question 1

The most efficient combination of resources in producing a given output is the combination that

Accepted Answer

A) comes closest to using the same quantities of land, labor, capital, and entrepreneurial ability. 
B) minimizes the cost per unit of output. 
C) uses the smallest total quantity of all resources. 
D) conserves most on the use of labor. 
A) comes closest to using the same quantities of land, labor, capital, and entrepreneurial ability. 
B) minimizes the cost per unit of output. 
C) uses the smallest total quantity of all resources. 
D) conserves most on the use of labor. B

Question 2

The incentive problem under communist central planning refers to the idea that

Accepted Answer

A) planners had to direct required inputs to each enterprise. 
B) workers, managers, and entrepreneurs could not personally gain by responding to shortages or surpluses or by introducing new and improved products. 
C) the immediate effect of more investment was less consumption. 
D) exports had to be equal to imports for a central plan to work. 
A) planners had to direct required inputs to each enterprise. 
B) workers, managers, and entrepreneurs could not personally gain by responding to shortages or surpluses or by introducing new and improved products. 
C) the immediate effect of more investment was less consumption. 
D) exports had to be equal to imports for a central plan to work. B

Question 3

Businesses seeking higher profits and resource suppliers seeking higher incomes lead to changes in the allocation of resources among different firms and end up with

Accepted Answer

A) consumers at the losing end. 
B) output that society wants. 
C) unnecessary conflict and turmoil. 
D) a need for government action. 
A) consumers at the losing end. 
B) output that society wants. 
C) unnecessary conflict and turmoil. 
D) a need for government action. B

Question 4

College graduates who dislike business risk will mostly seek to be hired by firms as labor, rather than starting their own firms as entrepreneurs.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following would not be emphasized in a capitalist economy?

Accepted Answer

A) private ownership of capital and other resources 
B) competition and decentralized decisions regarding production and consumption 
C) reliance on market forces to coordinate economic activity 
D) prevention of firms from exposing themselves to financial risk 
A) private ownership of capital and other resources 
B) competition and decentralized decisions regarding production and consumption 
C) reliance on market forces to coordinate economic activity 
D) prevention of firms from exposing themselves to financial risk

Question 6

The simple circular flow model shows that workers and capital owners offer their services to firms through the

Accepted Answer

A) product markets. 
B) resource markets. 
C) money markets. 
D) financial markets. 
A) product markets. 
B) resource markets. 
C) money markets. 
D) financial markets.

Question 7

Which of the following does not foster innovation and technological advance?

Accepted Answer

A) competition in markets 
B) freedom of choice and enterprise 
C) self-interest and personal rewards 
D) fear and avoidance of risk 
A) competition in markets 
B) freedom of choice and enterprise 
C) self-interest and personal rewards 
D) fear and avoidance of risk

Question 8

The circular flow model illustrates

Accepted Answer

A) the importance of having a central plan for the economy. 
B) how capital and other resources are created. 
C) how money is created by the banking system. 
D) the interdependence of businesses and consumers. 
A) the importance of having a central plan for the economy. 
B) how capital and other resources are created. 
C) how money is created by the banking system. 
D) the interdependence of businesses and consumers.

Question 9

In a market system, more resources will move toward an industry and expand its production if the industry has

Accepted Answer

A) positive revenues. 
B) positive costs. 
C) TC  TR. 
A) positive revenues. 
B) positive costs. 
C) TC  TR.

Question 10

The term consumer sovereignty means that

Accepted Answer

A) government is responsible for protecting consumers' interests. 
B) what is produced is ultimately determined by what consumers buy. 
C) there are no limits on what consumers may buy in a market system. 
D) producers have strong control over what consumers buy. 
A) government is responsible for protecting consumers' interests. 
B) what is produced is ultimately determined by what consumers buy. 
C) there are no limits on what consumers may buy in a market system. 
D) producers have strong control over what consumers buy.

Question 11

Which of the following statements about self-interest in a market system is false?

Accepted Answer

A) Self-interest usually motivates an individual to deliver something of value to others. 
B) Self-interest of entrepreneurs implies seeking maximum profits or minimum losses. 
C) Self-interest applies only to capitalists and entrepreneurs, not to workers employed by others. 
D) In a market system, consumers are just like firms: self-interest is what motivates them. 
A) Self-interest usually motivates an individual to deliver something of value to others. 
B) Self-interest of entrepreneurs implies seeking maximum profits or minimum losses. 
C) Self-interest applies only to capitalists and entrepreneurs, not to workers employed by others. 
D) In a market system, consumers are just like firms: self-interest is what motivates them.

Question 12

In what type of business do the owners bear no personal financial responsibility for the company's debts and obligations?

Accepted Answer

A) partnerships 
B) corporations 
C) sole proprietorships 
D) in all of the businesses listed in the other answers 
A) partnerships 
B) corporations 
C) sole proprietorships 
D) in all of the businesses listed in the other answers

Question 13

The government may impose industrial safety regulations and occupational licensing requirements in which of the following economic systems?

Accepted Answer

A) laissez-faire economy 
B) pure capitalism 
C) mixed-market economy 
D) macroeconomic system 
A) laissez-faire economy 
B) pure capitalism 
C) mixed-market economy 
D) macroeconomic system

Question 14

In a market economy, the incomes of consumers depend primaril y upon

Accepted Answer

A) government policies in setting wages and interest rates. 
B) the quantity and prices of resources that they possess. 
C) the amount of savings that they have accumulated. 
D) how closely connected they are to government and business leaders.Difficulty: 02 Medium 
A) government policies in setting wages and interest rates. 
B) the quantity and prices of resources that they possess. 
C) the amount of savings that they have accumulated. 
D) how closely connected they are to government and business leaders.Difficulty: 02 Medium

Question 15

The production technique that is most efficient is the one that produces a given amount of output

Accepted Answer

A) using the least amount of labor resources. 
B) at the highest price per unit. 
C) at the lowest cost per unit. 
D) that yields the highest revenues. 
A) using the least amount of labor resources. 
B) at the highest price per unit. 
C) at the lowest cost per unit. 
D) that yields the highest revenues.

Question 16

Even if prices are fixed and competition is restricted by the government, the invisible hand will still work in the economy and lead to economic efficiency.

Accepted Answer

A) True 
 B)False

Question 17

The Heritage Foundation in 2015 ranked which of the following economies to have the highest economic freedom?

Accepted Answer

A) the United States 
B) Germany 
C) Japan 
D) Hong Kong 
A) the United States 
B) Germany 
C) Japan 
D) Hong Kong

Question 18

Even with the use of money, exchange and trade cannot occur if there is no coincidence of wants.

Accepted Answer

A) True 
 B)False

Question 19

Competition means that

Accepted Answer

A) sellers can manipulate market price by causing product scarcities. 
B) there are independently acting buyers and sellers in each market. 
C) a product can be purchased at a number of different prices. 
D) there is more than one seller in a market. 
A) sellers can manipulate market price by causing product scarcities. 
B) there are independently acting buyers and sellers in each market. 
C) a product can be purchased at a number of different prices. 
D) there is more than one seller in a market.

Question 20

According to the concept of the "invisible hand," if Susie opens and operates a profitable childcare center, then

Accepted Answer

A) government should regulate the business to ensure quality. 
B) the profit Susie earns indicates that she is overcharging for her services. 
C) she has served society's interests by providing a desired good or service. 
D) this demonstrates that consumer sovereignty is not present in this market. 
A) government should regulate the business to ensure quality. 
B) the profit Susie earns indicates that she is overcharging for her services. 
C) she has served society's interests by providing a desired good or service. 
D) this demonstrates that consumer sovereignty is not present in this market.

Exam 2: The Market System and the Circular Flow

The most efficient combination of resources in producing a given output is the combination that

The incentive problem under communist central planning refers to the idea that

Businesses seeking higher profits and resource suppliers seeking higher incomes lead to changes in the allocation of resources among different firms and end up with

College graduates who dislike business risk will mostly seek to be hired by firms as labor, rather than starting their own firms as entrepreneurs.

Which of the following would not be emphasized in a capitalist economy?

The simple circular flow model shows that workers and capital owners offer their services to firms through the

Which of the following does not foster innovation and technological advance?

The circular flow model illustrates

In a market system, more resources will move toward an industry and expand its production if the industry has

The term consumer sovereignty means that

Which of the following statements about self-interest in a market system is false?

In what type of business do the owners bear no personal financial responsibility for the company's debts and obligations?

The government may impose industrial safety regulations and occupational licensing requirements in which of the following economic systems?

In a market economy, the incomes of consumers depend primaril y upon

The production technique that is most efficient is the one that produces a given amount of output

Even if prices are fixed and competition is restricted by the government, the invisible hand will still work in the economy and lead to economic efficiency.

The Heritage Foundation in 2015 ranked which of the following economies to have the highest economic freedom?

Even with the use of money, exchange and trade cannot occur if there is no coincidence of wants.

Competition means that

According to the concept of the "invisible hand," if Susie opens and operates a profitable childcare center, then

Limits, Alternatives, and Choices

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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