Exam 2: The Market System and the Circular Flow

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(Consider This)In 2000,McDonald's introduced its McSalad Shaker,which failed to catch on with the public and was subsequently dropped from the menu.This failure illustrates the idea of:

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Answer the question using the following data,which show all available techniques for producing 20 units of a particular commodity: Resource Possible Production Techniques Land Labor Capital Entrepreneurial Ability \ 4 3 3 2 2 1 5 3 4 2 2 1 2 4 3 1 4 1 1 4 4 3 2 1 Refer to the data.Assuming that the firm is motivated by self-interest and that the 20 units that can be produced with each technique can be sold for $2 per unit,the firm will:

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

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The invisible hand promotes society's interests because:

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Private property:

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Economic profits and losses:

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Costs can be defined as total payments made to workers,land owners,and capital suppliers less payments to the entrepreneur for organizing and combining the other resources used to produce a good.

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Consumer sovereignty means that legislation now protects the rights of consumers to dispose of their incomes as they see fit.

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The coordination problem in the centrally planned economies refers to the idea that:

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