Economics chapter 1&2 quiz

Which of the following would NOT be embraced in the framework of pure capitalism?

All resources owned by the government.

Full production requires both...

Allocative efficiency and production efficiency.

On a production possibilities curve, the single optimal or best combination of output for any society...

Depends upon the preferences of society.

The competitive market system...

Encourages innovation because successful innovators are rewarded with economic profits.

Economics is the social science concerned with the problem of using or administering ______ resources to attain the greatest or maximum fulfillment of society's unlimited _______ and __________.

Scarce - needs - wants

Households and businesses are...

Sellers in the resource and product markets respectively.

Macroeconomics problems are usually examined from the _______ rather than the personal point of view.

Social

Which statement best describes a command economy?

The production and allocation of goods and services is determined primarily through government.

Which of the following is a limitation of the simple circular flow model?

the determination of product and resource prices is not explained.

A schedule or curve that shows the various combinations of two products a consumer can purchase with a specific amount of money income is...

A budget line.

Which of the following is real capital?

A construction crane.

A person should consume more of something when it's marginal...

Benefit exceeds its marginal cost.

Marginal analysis deals with...

Change in or the additional unit.

What is the direction of flow of costs, revenue, and consumption?

Clockwise.

What direction does the flow of goods and services move between business and households?

Counter clockwise.

Which statement is correct?

Freedom is a choice and enterprise are essential elements of the market system.

Economics is a social science concerned with...

He best use of scarce resources to achieve the maximum satisfaction of economic wants.

A normative statement is not that...

Is based on value judgments.

The problem Of aggregate inflation and unemployment are...

Major topics of macroeconomics.

Which of the following is NOT one of the scarce resources studied?

Money

What drives the circular flow model?

Pure profits.

When economists start with a theory, gather facts, and arrive at policy decisions they are using...

The deduction method.

The process of developing hypotheses, testing them against facts, and using the results to construct theories is called...

The scientific method.

Point inside a production possibilities curve best illustrates...

Unemployment.

What are the two fundamental facts that describe the economizing problem?

Unlimited needs and wants - Scarce resources

Which is NOT one of the five fundamental questions?

What goods and services should be produced by government?

Which is an illustration of a microeconomic question?

Will a new type of television set increase the number of buyers?