Question 1

More specialization in a market economy generally leads to the more efficient use of its resources.

Accepted Answer

A) True 
 B)False

Question 2

Command systems in the Soviet Union and pre-reform China failed primarily because of:

Accepted Answer

A)   coordination and incentive problems.
B)   greater resource scarcity than in market systems.
C)   the failure to accumulate and use capital.
D)   the failure to specialize in production.

Question 3

Which best describes the "invisible hand" concept?

Accepted Answer

A)   Highly detailed central direction of an economy will maximize the public's best interests.
B)   The market system works best when resources are highly substitutable.
C)   The problem of scarcity can best be overcome in a system of mixed capitalism.
D)   The desires of producers and resource suppliers to further their own self-interest will tend to promote the social interest.

Question 4

Which would not be characteristic of a capitalist economy?

Accepted Answer

A)   Government ownership of the factors of production
B)   Competition and unrestricted markets
C)   Reliance on the market system
D)   Free enterprise and choice

Question 5

The development of CDs and DVDs,which significantly reduced the market for cassette tapes,is an example of:

Accepted Answer

A)   specialization.
B)   derived demand.
C)   roundabout production.
D)   creative destruction.

Question 6

A market system is best characterized by:

Accepted Answer

A)   extensive government intervention in economic activity.
B)   the private production of most capital goods.
C)   government regulation of all private markets.
D)   central planning and control.

Question 7

Which of the following does not explain why the command systems of the Soviet Union and Eastern Europe failed?

Accepted Answer

A)   Coordination problems.
B)   Prices and profits did not fluctuate to reflect wants for a different allocation of resources.
C)   Incentive problems.
D)   The failure to use money for most exchanges.

Question 8

All of the following accurately describe a market economy except:

Accepted Answer

A)   government establishes maximum and minimum prices for most goods and services.
B)   prices serve as a signaling mechanism to buyers and sellers.
C)   the allocation of resources is determined by their prices.
D)   the actions of buyers and sellers establish a product's price.

Question 9

In a market economy,entrepreneurs are most concerned with:

Accepted Answer

A)   maximizing utility or satisfaction from limited incomes.
B)   increasing the wages and salaries of workers.
C)   maximizing profits or minimizing losses.
D)   the selfish pursuit of money.

Question 10

In 1999,McDonald's introduced the "Big Xtra" and it turned out to be a successful product.In the marketplace for fast-food products,this success would be an example of:

Accepted Answer

A)   derived demand.
B)   medium of exchange.
C)   consumer sovereignty.
D)   roundabout production.

Question 11

A characteristic of the market system is:

Accepted Answer

A)   frequent use of price controls.
B)   frequent use of barter.
C)   extensive use of capital goods.
D)   low interest rates.

Question 12

The economy of Cuba most closely approximates:

Accepted Answer

A)   laissez-faire capitalism.
B)   a command economy.
C)   pure capitalism.
D)   a market economy.

Question 13

The market system is an economic system that:

Accepted Answer

A)   produces more consumer goods than capital goods.
B)   produces more capital goods than consumer goods.
C)   gives private individuals and institutions the right to own resources used in production.
D)   gives the government the right to tax individuals and corporations for the production of capital goods.

Exam 2: The Market System and the Circular Flow

Which best describes the "invisible hand" concept?

Correct Answer
verified

The development of CDs and DVDs,which significantly reduced the market for cassette tapes,is an example of:

Correct Answer
verified

All of the following accurately describe a market economy except:

Correct Answer
verified

A market system is best characterized by:

Correct Answer
verified

The economy of Cuba most closely approximates:

Correct Answer
verified

Which would not be characteristic of a capitalist economy?

Correct Answer
verified

More specialization in a market economy generally leads to the more efficient use of its resources.

Correct Answer
verified

Command systems in the Soviet Union and pre-reform China failed primarily because of:

Correct Answer
verified

In 1999,McDonald's introduced the "Big Xtra" and it turned out to be a successful product.In the marketplace for fast-food products,this success would be an example of:

Correct Answer
verified

A characteristic of the market system is:

Correct Answer
verified

In a market economy,entrepreneurs are most concerned with:

Correct Answer
verified

Which of the following does not explain why the command systems of the Soviet Union and Eastern Europe failed?

Correct Answer
verified

The market system is an economic system that:

Correct Answer
verified

Exam 2: The Market System and the Circular Flow

Which best describes the "invisible hand" concept?

Correct AnswerverifiedShow Answer

The development of CDs and DVDs,which significantly reduced the market for cassette tapes,is an example of:

Correct AnswerverifiedShow Answer

All of the following accurately describe a market economy except:

Correct AnswerverifiedShow Answer

A market system is best characterized by:

Correct AnswerverifiedShow Answer

The economy of Cuba most closely approximates:

Correct AnswerverifiedShow Answer

Which would not be characteristic of a capitalist economy?

Correct AnswerverifiedShow Answer

More specialization in a market economy generally leads to the more efficient use of its resources.

Correct AnswerverifiedShow Answer

Command systems in the Soviet Union and pre-reform China failed primarily because of:

Correct AnswerverifiedShow Answer

In 1999,McDonald's introduced the "Big Xtra" and it turned out to be a successful product.In the marketplace for fast-food products,this success would be an example of:

Correct AnswerverifiedShow Answer

A characteristic of the market system is:

Correct AnswerverifiedShow Answer

In a market economy,entrepreneurs are most concerned with:

Correct AnswerverifiedShow Answer

Which of the following does not explain why the command systems of the Soviet Union and Eastern Europe failed?

Correct AnswerverifiedShow Answer

The market system is an economic system that:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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