Exam 2: The Market System and the Circular Flow

Central planning often suffers from a coordination problem and an incentive problem.

Economic efficiency is the primary guide in answering which of the fundamental questions in a market economy?

The market system is said to be characterized by "consumer sovereignty." This is because

In the circular flow model of the market system, households' major role is to

If consumer desire for product X increases, all of the following will occur except

In the circular flow model, households earn their incomes in the

The market system's answer to the fundamental question "How will the system promote progress?" is essentially

The circular flow model illustrates

Which of the following best describes the invisible-hand concept?

Which of the following statements about the right to private ownership is false?

The advent of Netflix movie streaming and Redbox kiosks renting DVD and Blu-ray movies have virtually demolished the market for video rentals from brick and mortar stores such as Blockbuster. This is an Example of

From society's point of view, the economic function of profits and losses is to

Profits are the primary "success indicator" for firms in a centrally planned economy.

The money income of households consists of all the following, except

In a market system, which of the following will eliminate high-cost producers and allow only the low-cost producers to survive?

The simple circular flow model shows that

In a market system, self-interest is the motivating force that

The guiding function of prices tends to keep resources flowing toward their most highly valued uses.

The highly influential book by Adam Smith, who brought up the "invisible hand" notion, is titled

The problems of central planning become less complex as an economy expands over time.