Exam 2: The Market System and the Circular Flow

If competitive industry Y is incurring substantial losses, output will

In the circular flow diagram, firms get their ability to pay for the costs of production from the

Economic profits and losses

Which of the following is a distinguishing feature of a command system?

One major element of the command system is

International specialization and trade

Refer to the provided figure. If box A represents households, B the product market, and C businesses, and if flow (3) represents revenues, then flow (1) would represent

Laissez-faire capitalism is characterized by

If economic profits in a particular industry increase, then we would expect

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

A required element for specialization to lead to an increase in the satisfaction of society's wants is

"Consumer sovereignty" refers to the

In a market economy, the incomes of consumers depend primarily upon

Suppose that an individual sees a tremendous opportunity to produce and sell a new product but dismisses the idea because there is no way to exploit this opportunity for personal gain. This situation Best identifies the

In a market system, a firm's employees are typically shielded from business risk by

Two major virtues of the market system are that it

The following table illustrates alternative production techniques for producing 18 widgets that can be sold for $1 each for a total revenue of $18. If the price of labor increases from $2 to $3, then the results of using Technique C will change from an Economic

Which of the following would be primarily determined in the resource markets?

College graduates who dislike business risk will mostly seek to be hired by firms as labor, rather than starting their own firms as entrepreneurs.

Laissez-faire capitalism limits the government's economic functions to the following, except