Exam 2: The Market System and the Circular Flow

Answer the question based on the following information: Suppose 10 units of product X can be produced by employing just labor and capital in the three ways shown below. Assume the prices of labor and capital are as shown. Which technique is the most economically efficient?

The market system is also known as ___, while the command system is also known as _____.

The following table illustrates alternative production techniques for producing 18 widgets that can be sold for $1 each for a total revenue of $18. If the price of labor increases from $2 to $3, then the results of using Technique C will change from an economic

An increase in consumer desire for strawberries is most likely to

If competitive industry Z is making substantial economic profit, output will

Economic profits and losses

Of the following countries, which one best exhibits the characteristics of a market economy?

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

Which of the following is a characteristic of a corporation?

"Consumer sovereignty" means that

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

Answer the question based on the following information: Suppose 30 units of product A can be produced by employing just labor and capital in the four ways shown below. Assume the prices of labor and capital are $2 and $3, respectively. Which technique is economically most efficient in producing A?

The use of money for exchange and trade

Which is one of the five fundamental questions that need to be dealt with in any economic system?

Explain what is meant by a command economy.

Examples of command economies are

The wants of consumers are expressed in the product market with "dollar votes."

The dollar votes of consumers ultimately determine the composition of output and the allocation of resources in a market economy. This statement best describes the concept of

The economy of the United States can best be described as laissez-faire capitalism.

The market system's answer to the fundamental question "Who will get the goods and services?" is essentially