Question 1

Low-cost production is not important for Bitcoin miners since Bitcoin is intangible and exists only in cyberspace.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following best illustrates the circular flow model in action?

Accepted Answer

A) Bobbie goes to work and builds cars; she uses the income she receives to buy food at the grocery store. 
B) Evan buys a new couch; the owner of the furniture store uses some of the money from the sale to pay her supplier and uses the rest to take her family out to dinner. 
C) Boeing experiences a surge in orders for new airplanes, prompting the company to hire more workers. 
D) All of these answers illustrate the workings of the circular flow model. 
A) Bobbie goes to work and builds cars; she uses the income she receives to buy food at the grocery store. 
B) Evan buys a new couch; the owner of the furniture store uses some of the money from the sale to pay her supplier and uses the rest to take her family out to dinner. 
C) Boeing experiences a surge in orders for new airplanes, prompting the company to hire more workers. 
D) All of these answers illustrate the workings of the circular flow model.

Question 3

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.

Question 4

The term "laissez-faire" suggests that

Accepted Answer

A) land and other natural resources should be privately owned, but capital should be publicly owned. 
B) land and other natural resources should be publicly owned, but capital should be privately owned. 
C) government should not interfere with the operation of the economy. 
D) government action is absolutely necessary if the economy is to achieve full employment and full production. 
A) land and other natural resources should be privately owned, but capital should be publicly owned. 
B) land and other natural resources should be publicly owned, but capital should be privately owned. 
C) government should not interfere with the operation of the economy. 
D) government action is absolutely necessary if the economy is to achieve full employment and full production.

Question 5

In a market economy, the incomes of consumers depend primarily 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. 
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.

Question 6

Competition is more likely to exist when

Accepted Answer

A) there is easy entry into and exit out of industries. 
B) a government-issued license is required to set up a firm in an industry. 
C) the government purchases most goods and services. 
D) economic power is concentrated among a few large firms. 
A) there is easy entry into and exit out of industries. 
B) a government-issued license is required to set up a firm in an industry. 
C) the government purchases most goods and services. 
D) economic power is concentrated among a few large firms.

Question 7

The main characteristics of a modern market system include all of the following except

Accepted Answer

A) entrepreneurs are free to obtain and use resources to produce goods and services. 
B) consumers are free to buy goods and services that their budgets allow. 
C) economic power is diffused by competition among economic units. 
D) government is restricted to national defense and does not intervene at all in various markets. 
A) entrepreneurs are free to obtain and use resources to produce goods and services. 
B) consumers are free to buy goods and services that their budgets allow. 
C) economic power is diffused by competition among economic units. 
D) government is restricted to national defense and does not intervene at all in various markets.

Question 8

Quantitative measures of managerial success, such as production targets or quotas, are highly foolproof and are thus ideal to use in increasing economic efficiency.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is a distinguishing feature of laissez-faire capitalism?

Accepted Answer

A) public ownership of all capital 
B) central planning 
C) minimal government intervention 
D) a circular flow of goods, resources, and money 
A) public ownership of all capital 
B) central planning 
C) minimal government intervention 
D) a circular flow of goods, resources, and money

Question 10

Private property and freedom of choice in a market system have the following implications, except

Accepted Answer

A) individuals are free to take on the financial risks involved in a business. 
B) trades that take place in the economy are mutually agreeable transactions among individuals. 
C) economic agents can act in their own self-interest. 
D) large firms are allowed to coerce other firms and individuals. 
A) individuals are free to take on the financial risks involved in a business. 
B) trades that take place in the economy are mutually agreeable transactions among individuals. 
C) economic agents can act in their own self-interest. 
D) large firms are allowed to coerce other firms and individuals.

Question 11

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

Accepted Answer

A) "Through government-funded research programs." 
B) "Through redistribution of income to promote greater equality." 
C) "Through training and retraining programs." 
D) "Through the profit potential that encourages development of new technology." 
A) "Through government-funded research programs." 
B) "Through redistribution of income to promote greater equality." 
C) "Through training and retraining programs." 
D) "Through the profit potential that encourages development of new technology."

Question 12

The economic function of profits and losses is to

Accepted Answer

A) bring about a more equal distribution of income. 
B) signal that resources should be reallocated. 
C) eliminate small firms and reduce competition. 
D) tell government which industries need to be subsidized. 
A) bring about a more equal distribution of income. 
B) signal that resources should be reallocated. 
C) eliminate small firms and reduce competition. 
D) tell government which industries need to be subsidized.

Question 13

On the basis of the information, it can be said that

Accepted Answer

A) no coincidence of wants exists between any two states. 
B) a coincidence of wants exists between Michigan and Washington. 
C) a coincidence of wants exists between Texas and Washington. 
D) a coincidence of wants exists between Michigan and Texas. 
A) no coincidence of wants exists between any two states. 
B) a coincidence of wants exists between Michigan and Washington. 
C) a coincidence of wants exists between Texas and Washington. 
D) a coincidence of wants exists between Michigan and Texas.

Question 14

Refer to the diagram. Flow 1 represents

Accepted Answer

A) wage, rent, interest, and profit income. 
B) land, labor, capital, and entrepreneurial ability. 
C) goods and services. 
D) consumer expenditures. 
A) wage, rent, interest, and profit income. 
B) land, labor, capital, and entrepreneurial ability. 
C) goods and services. 
D) consumer expenditures.

Question 15

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

Accepted Answer

A) promote the equal distribution of real assets and wealth. 
B) achieve full employment and price level stability. 
C) contribute to a more equal distribution of income. 
D) reallocate resources from less-desired to more-desired uses. 
A) promote the equal distribution of real assets and wealth. 
B) achieve full employment and price level stability. 
C) contribute to a more equal distribution of income. 
D) reallocate resources from less-desired to more-desired uses.

Question 16

If the total costs of producing 1,500 units of output is $12,000 and this output sold to consumers for a total of $15,000, then the firm would earn economic profits of

Accepted Answer

A) $15,000. 
B) $18,000. 
C) $3,000. 
D) $12,000. 
E) $27,000. 
A) $15,000. 
B) $18,000. 
C) $3,000. 
D) $12,000. 
E) $27,000.

Question 17

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.

Question 18

Which of the following is not a reason why specialization and trade are beneficial to society?

Accepted Answer

A) The total output of economic goods may be increased even without any increase in resources. 
B) Scarce resources are utilized more efficiently by exploiting differences among them. 
C) Specialization fosters learning by doing, thus lowering the unit-costs of products. 
D) Firms and workers become less dependent on others for producing goods and services. 
A) The total output of economic goods may be increased even without any increase in resources. 
B) Scarce resources are utilized more efficiently by exploiting differences among them. 
C) Specialization fosters learning by doing, thus lowering the unit-costs of products. 
D) Firms and workers become less dependent on others for producing goods and services.

Question 19

Refer to the diagram. Arrows (1)and (2)represent

Accepted Answer

A) goods and resources, respectively. 
B) money incomes and output, respectively. 
C) output and money incomes, respectively. 
D) resources and goods, respectively. 
A) goods and resources, respectively. 
B) money incomes and output, respectively. 
C) output and money incomes, respectively. 
D) resources and goods, respectively.

Question 20

The simple circular flow model shows that

Accepted Answer

A) households are on the buying side of both product and resource markets. 
B) businesses are on the selling side of both product and resource markets. 
C) households are on the selling side of the resource market and on the buying side of the product market. 
D) businesses are on the buying side of the product market and on the selling side of the resource market. 
A) households are on the buying side of both product and resource markets. 
B) businesses are on the selling side of both product and resource markets. 
C) households are on the selling side of the resource market and on the buying side of the product market. 
D) businesses are on the buying side of the product market and on the selling side of the resource market.

Exam 2: The Market System and the Circular Flow

Low-cost production is not important for Bitcoin miners since Bitcoin is intangible and exists only in cyberspace.

Which of the following best illustrates the circular flow model in action?

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

The term "laissez-faire" suggests that

In a market economy, the incomes of consumers depend primarily upon

Competition is more likely to exist when

The main characteristics of a modern market system include all of the following except

Quantitative measures of managerial success, such as production targets or quotas, are highly foolproof and are thus ideal to use in increasing economic efficiency.

Which of the following is a distinguishing feature of laissez-faire capitalism?

Private property and freedom of choice in a market system have the following implications, except

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

The economic function of profits and losses is to

On the basis of the information, it can be said that

Refer to the diagram. Flow 1 represents

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

If the total costs of producing 1,500 units of output is $12,000 and this output sold to consumers for a total of $15,000, then the firm would earn economic profits of

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

Which of the following is not a reason why specialization and trade are beneficial to society?

Refer to the diagram. Arrows (1)and (2)represent

The simple circular flow model shows that

Limits, Alternatives, and Choices

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, 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

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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