ch 2 hw/ quiz

the goods and services that money can buy.

Consider the statement: "We want money only to part with it." When people express a desire to 'have money,' they really want

Goods and services that are profitable.

The market system's answer to the fundamental question "What will be produced?" is essentially

competition

The regulatory mechanism of the market system is:

households are on the selling side of the resource market and on the buying side of the product market.s and services

The simple circular flow diagram shows that:

market systems and command systems.

The two general types of economic systems that exist today are:

capitalism

The market system is often also known as:

provides a common value that makes buying and selling transactions simpler than would be the case with barter.

the use of money

c

"Division of labor" means that workers a.identify the products than can be produced so that they can take advantage of their individual abilities and skills. b.develop skills needed to complete a job. c.specialize in tasks that take advantage of their individual abilities and skills. d.share the labor needed to complete a job.

independently acting buyers and sellers and the freedom to enter or leave markets.

Broadly defined, competition involves

command, market, laissez-faire systems

Decide whether each of the following descriptions most closely corresponds to being part of a command system, a market system, or a laissez-faire system.a. A woman who wants to start a flower shop finds she cannot do so unless the central government has already decided to allow a flower shop in her area: ______ b. Shops stock and sell the goods their customers want but the government levies a sales tax on each transaction to fund elementary schools, public libraries, and welfare programs: ______ c. The only taxes levied by the government are to pay for national defense, law enforcement, and a legal system designed to enforce contracts between private citizens:_____

who owns the factors of production and the methods used to coordinate economic activity

Economic systems differ according to which two main characteristics?

d

Human specialization contributes to society's total output by which of the following: a. permitting people to take advantage of existing differences in their abilities and skills. b.saving time in switching tasks. c.permitting people to get better at doing one thing by repetition. d.all of these answers are advantages of human specialization.

d

Human specialization—the division of labor—enhances productivity and efficiency by a.allowing workers to take advantage of existing differences in their abilities and skills. b.avoiding the time loss involved in shifting from one production task to another. c.allowing workers to develop skills by working on one, or a limited number, of tasks. d.all of the means identified in the other answers.

product; resource

In terms of the circular flow diagram, households make expenditures in the _________market and receive income through the _________

for exchange to occur, each seller must have a product that some buyer wants.

The "coincidence of wants" problem associated with barter refers to the fact that

creative destruction

The advent of DVDs has virtually demolished the market for videocassettes. This is an example of:

the wealth of nations

The highly influential book by Adam Smith, who brought up the "invisible-hand" notion, is titled

assuming competition, private and public interests will coincide.

The invisible hand concept suggests that:

Guiding function of prices

The market system communicates changes in market conditions and elicits appropriate responses from businesses and resource suppliers through changes in prices. This is known as the:

provide an incentive to maintain property and allow for the orderly transfer of property ownership.

The market system depends on private property ownership and the protection of private property rights to

"Goods and services that are profitable."

There are five fundamental questions asked by any market system. The market system's answer to the question "What will be produced?" is essentially: [ Select ] [""Low cost goods and services."", ". "Goods and services that possess lasting value."", ""Goods and service that can be produced using large amounts of capital."", ""Goods and services that are profitable.""] .

d

What is produced is ultimately determined by a. consumers because they participate in marketing surveys. b.producers because they determine what to produce. c.producers because they are driven by profits. d.consumers because if the goods offered are not what consumers want, consumers will not buy them.

c

When an economy relies on specialization, multiple choice 3 a. there will be more efficiency in production, but there will be disruptions in the distribution of goods. b. trade is established according to the value of the specialized product. c. trade enables individuals to obtain the goods in which they do not have a specialization. d.centralized coordination is needed to ensure that everyone obtains the goods they need.

a

Which would not be characteristic of a capitalist economy? a.Government ownership of most factors of production b.Competition and unrestricted markets c.Reliance on the market system d.Freedom of enterprise and choice

find a person who has what you want and a person who needs what you have to offer.

barter requires that you

d

Self-interest helps achieve society's economic goals because a. producers know which goods consumers want the most. b.consumers and producers both operate based on society's economic goals. c.consumers know which goods can be produced at the lowest cost. d.as consumers and producers exercise their freedom to act in their own self-interest markets will produce the desired goods at the lowest possible cost.

In ways that minimize the cost of output.

The market system's answer to the fundamental question "How will the goods and services be produced?" is essentially

"Using the least-cost production techniques."

The market system's answer to the fundamental question "How will the goods and services be produced?" is essentially: [ Select ] [""Using the least-cost production techniques."", ""Using the latest technology."", "By exploiting labor."", ""With as much machinery as possible.""]

Through the guiding function of prices and the incentive function of profits.

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

"Through the guiding function of prices and the incentive function of profits."

The market system's answer to the fundamental question "How will the system accommodate change?" is essentially: [ Select ] [""Through training and retraining programs."", ""Through trial and error."", ""Through the guiding function of prices and the incentive function of profits."", ""Through government leadership and direction.""]

"Through the profit potential that encourages development of new technology."

The market system's answer to the fundamental question "How will the system promote progress?" is essentially: [ Select ] [""Through training and retraining programs."", ""Through redistribution of income to promote greater equality."", ""Through the profit potential that encourages development of new technology."", ""Through government funded research programs.""]

"Those willing and able to pay for them."

The market system's answer to the fundamental question "Who will get the goods and services?" is essentially: [ Select ] [""Those willing and able to pay for them."", ""Those who physically produced them."", ""Those who get utility from them."", ""Those who most need them.""]

b

The use of capital in the production process a.is more expensive than labor. b.improves efficiency, increases output, and provides for growth. c. improves efficiency, reduces output, and provides for growth. d. replaces labor.

Through the profit potential that encourages development of new technology.

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

Those most willing and able to pay for them.

The market system's answer to the fundamental question "Who will get the goods and services?" is essentially

b

There is a wide variety of desired goods and services in a market system because a. producers determine what to produce. b.individual wants are diverse. c.consumers change their minds frequently. d.there is always a need to produce something new and improved.

a. creative destruction b. incentive problem c. coordination problem d. invisible hand

a. "If you compare a list of today's most powerful and profitable companies with a similar list from 30 years ago, you will see lots of new entries:"____ b. "Managers in the old Soviet Union often sacrificed product quality and variety because they were being awarded bonuses for quantitative, not qualitative, targets:"______ c. "Each day, central planners in the old Soviet Union were tasked with setting 27 million prices—correctly:"______ d. "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest:"_______

a.) Market b.) Private property c.) Competition d.) Freedom of enterprise e.) Self-interest f.) Mutually agreeable g.) Freedom of choice

a. An institution that brings buyers and sellers together:_______ b. The right of private persons and firms to obtain, control, employ, dispose of, and bequeath land, capital, and other property: ______ c. The presence in a market of independent buyers and sellers who compete with one another and who are free to enter and exit the market as they each see fit: ____ d. The freedom of firms to obtain economic resources, decide what products to produce with those resources, and sell those products in markets of their choice: ________ e. What each individual or firm believes is best for itself and seeks to obtain: _____ f. Economic transactions willingly undertaken by both the buyer and the seller because each feels that the transaction will make him or her better off: .g. The freedom of resource owners to dispose of their resources as they think best; of workers to enter any line of work for which they are qualified; and of consumers to spend their incomes in whatever way they feel is most appropriate: ____.