chapter 1-2

Which is a major feature of the market system?

the right to own private property and control resource use

Which would not be characteristic of a capitalist economy?

Government ownership of the factors of production

A basic characteristic of a command system is that:

Government owns most economic resources

The circular flow model shows that the goods and services produced by business firms are sold through:

Product markets

The institution of private property is sustained over time by:

bequests.

In the circular flow model, households

buy products and sell resources.

What to produce in a market economy is ultimately determined by the:

spending decisions of households

The idea that the desires of resource suppliers and producers to further their own self-interest will automatically further the public interest is know as"

the invisible hand

The private ownership of property resources and use of prices to direct and coordinate economic activity is characteristic of

a market system

Which is necessary to make a trade in a barter economy?

A coincidence of wants

The market system is an economic system that:

Gives private individuals and institutions the right to own resources used in production

The term dollar votes means:

Consumers "vote" for certain products to be produced by how they spend their incomes.

Economists have difficulty applying the scientific method because:

Controlled laboratory experiments are impossible or often infeasible.

The general concern of economics is with the study of the:

Efficient use of limited productive resources to satisfy economics wants

The individual who brings together economic resources and assumes the risk in a capitalist economy is called the:

Entrepreneur

In the simple circular flow model:

Households are sellers of resources and demanders of products.

economics is the study of what:

How people, institutions, and society make choices under conditions of scarcity.

As a consequence of the condition of scarcity:

Individuals and communities have to make choices from among alternatives.

Advantages of specilization do not include:

Less interdependence

The branch of economics that focuses primarily on aggregates is:

Macroeconomics

The primary focus of the study of economics is with:

Making the most efficient use of scarce productive resources

From an economic perspective, when a consumer decides to buy more life insurance, the consumer has most likely concluded that the:

Marginal benefits of more insurance coverage are greater than the marginal costs.

Economics systems differ according to what two main characteristics

Ownership of resources, and methods of coordinating economic activity.

Markets in which firms sell their output of goods and services are called:

Product markets

The influential book written by Adam Smith was:

The Wealth of Nations.

One major feature of the economic perspective is:

The assumption of purposeful behavior by individuals

The fact that expenditures on products and payments to owners of resources used to produce those products flow in opposite directions is known as:

The circular flow of income

Which best describes the "invisible hand" concept?

The desires of producers and resource suppliers to further their own self-interest will automatically promote the social interest

Macroeconomics is the study of economics from the standpoint of:

The overall economy

Which statement best describes a capitalist economy?

The production and allocation of goods and services is determined primarily through markets

Competition denotes a condition where

There are many independent buyers and sellers in a market.

In a capitalistic economy:

There is a reliance on the market system

Macroeconomics focuses on:

Total output and the general level of prices in the economy

The satisfaction or pleasure one gets from consuming a good or service is:

Utility

What is the largest source of earned income for U.S. households?

Wages and salaries.

The term consumer sovereignty means that:

What is produced is ultimately determined by what consumers buy.

By consumer sovereignty we meant that:

consumers determine what goods and services are produced.

In a market system, well-defined property rights are important because they:

encourage economic activity

The use of a money for exchange:

encourages more specialization in production.

Which is characteristic of the market system?

free enterprise and choice

Capitalism is an economic system that:

gives private individuals and corporations that right to own productive resources

The basic economic problem is essentially one of deciding how to make the best use of:

limited resources to satisfy unlimited economic wants

The term scarcity in economics refers to the fact that:

no country can produce enough products to satisfy everybody's economic wants.

The market system is characterized by:

private ownership of the means of produciton

The utility of a specific product

varies from person to person using the product