Exam 2: B: The Market System and the Circular Flow

The division of labour enhances productivity and efficiency by:

"The 'dollar votes' of consumers ultimately determine the composition of output and the allocation of resources in a market economy." This statement best describes the concept of:

The guiding function of prices indicates that, at equilibrium prices, neither product surpluses nor shortages can occur.

Freedom of enterprise is defined as:

Refer to the circular flow model of the economy.In the diagram flow (4) represents:

Producing goods and services is:

Which is assumed to be most limited in scope under a market system?

The market system is characterized by:

Consumers express self-interest when they:

In market economies, profit primarily depends on consumer demand, production efficiency, and product quality.In contrast, in command economies, profit depends on:

Refer to the circular flow model of the economy.In the diagram flow (1) represents:

Consumer sovereignty means that legislation now protects the rights of consumers to dispose of their incomes as they see fit.

In the simple circular flow model businesses are suppliers of final products.

Which condition will encourage competition?

Specialization in production is important primarily because it:

By free enterprise, we mean that:

The term dollar votes means:

The answer to "Who will get the output?" is based on:

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