Exam 2: The Market System and the Circular Flow

The government may impose industrial safety regulations and occupational licensing requirements in which of the following economic systems?

One major element of the command system is:

Most market economies, such as the U.S. and the U.K., allow government policies and actions aimed at promoting economic growth and stability.

What, according to economist Donald Boudreaux in the "Last Word" section of the chapter, best explains why the market system is not a random, chaotic mess?

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

In a market system, a firm's employees are typically shielded from business risk by:

Property rights give to some people the right to coerce others into giving up their property.

Refer to the above figure. If box A represents households, B the product market, and C businesses, and if flow (3) represents revenues, then flow (1) would represent:

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

A corporation is a type of business firm where the debt of the firm is considered its owners' personal responsibility.

The following table illustrates alternative production techniques for producing 18 widgets that can be sold for $1 each for a total revenue of $18. Refer to the above table. Using the technique cited in the previous question will result in an:

The simple circular flow model shows that workers and capital-owners offer their services to firms through the:

By freedom of enterprise, we mean that individual:

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

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

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

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

In a command system:

Capital accumulation in a market system results from:

Economic efficiency entails producing a certain output with the minimum number of units of inputs.