Chapter 1&2 Quiz Macroeconomics
The points on a production possibilities frontier all represent
. the efficient use of resources.
Which of the following is an example of the profit motive as an incentive?
A business owner expands a factory to make more goods.
Which of the following is an example of a positive externality resulting from an outdoor band concert?
An elderly woman in her apartment hears a song that she liked as a child.
What is one reason that local law enforcement is considered a public good?
Everyone in the community benefits from it.
In which of these situations would a manufacturer decide to produce more units?
The marginal cost is less than the marginal benefit.
Which economic goal reflects the desire of individuals to make their own choices about owning property or becoming entrepreneurs?
freedom
Which policy change was partly responsible for economic growth in China starting in the 1970s?
giving farmers the chance to own land
Who makes most basic decisions in a centrally planned economy?
government
China's economy is considered more mixed than North Korea's because China
has freer markets.
Drawing a production possibilities curve helps a country's economists determine
how the production of one good affects the production of another.
Someone taking a course in Web design is affecting what factor of production?
human capital
When consumers choose not to purchase a good, what is one likely response by the producer of that good?
lower the price of the good
What role does competition among producers play in a free market?
It causes firms to produce what consumers want while moderating prices.
How does improved technology allow the economy to operate more efficiently?
It helps to make better use of the nation's limited resources.
What is an argument that some analysts use to criticize government regulation?
It results in inefficiency.
Which statement best describes opportunity cost?
Opportunity cost is the best alternative decision.
Which of these might indicate that the national economy is stable?
Prices for groceries and other daily needs stay about the same from year to year.
What is one reason centrally planned economies tend not to be efficient?
Workers lack the incentive to work harder.
Governments have often become involved in market-based economies in order to
address various limits of the free market system.
Which of these would be an alternative use for farmland?
an amusement park
Why does a free market economy result in the availability of a wide variety of goods and services?
because producers have incentives to meet consumers' desires for variety
Why do individuals, businesses, and governments make trade-offs?
because resources are limited
How might government water-pollution regulations serve the public interest?
by ensuring that water does not contain toxins that could endanger people
How is a society's economic system defined?
by how it answers the three basic economic questions
Public goods are examples of market failure because producing these goods in the free market
does not allow for the efficient distribution of resources.
Police protection and national defense are examples of what government role in the circular flow model?
producing goods and services from factors purchased in the factor market
The goal of government welfare programs is to
raise the standard of living of certain less-fortunate members of society.
What is the term used to describe a temporary low supply of a good or service?
shortage
What did Karl Marx believe about capitalism?
that it led to exploitation of workers
The due process clauses of the Constitution support the principle that
the government can take private property only to meet a public need.
Why do markets exist?
to allow people to exchange goods and services
Why do government experts track the business cycle?
to try to predict what will happen to the U.S. economy
According to the circular flow model of a market economy, firms buy factors of production from households, then
use these factors to produce goods and services.
