Exam 2: An Introduction to Economic Systems and the Workings of the Price System

The division of labor increases output because workers experience a feeling of accomplishment when performing the same task a number of times.

In a market economy, prices inform, motivate, and ration.

Division of labor increases the production of goods and services because:

Use the following diagram to answer the following questions. -Refer to Pen. The supply price of 10 pens is:

In a market economy, prices:

Which of the following statements is correct?

Use the following diagram to answer the following questions. -Refer to Pen. If the price of pens is $4 per pen, the quantity supplied will be:

Use the following diagram to answer the following questions. -Refer to Tea. Suppose the supply for tea decreases from S₁ to S₂. If price did not change, we would expect:

The law of demand exists because, in general:

Suppose there is a decrease in the demand for VCRs. We would expect:

One of the economic outcomes determined by the choices people make in an economic system is the quantities of various goods and services to be produced.

The law of supply exists because:

A schedule showing the amount of a good people are willing and able to purchase at various prices is:

Prices changed very little in the former command economies. Why do you think this to be the case?

An economic system determines:

Use the following diagram to solve the following problems. -Refer to Price Per Unit. If the quantity of apartment is 1000, what is the supply price?

Producers are assumed to maximize output.

Suppose the equilibrium price of tickets to a Shania Twain concert is $40 per ticket. Currently tickets are priced at $55 per ticket. We would expect to find:

Suppose there is excess demand in the market for Tickle Me Elmo toys. We would expect to find:

Discuss the pros and cons of division of labor.