Question 1

Laissez faire refers to a program of minimal interference in the market system.

Accepted Answer

A) True 
 B)False

Question 2

MC and MU are set equal to one another in a market economy because

Accepted Answer

A) producers and consumers are free to communicate with one another. 
B) producers and consumers both respond to the same price. 
C) consumers must accept the prices set by producers. 
D) producers must accept the price set by consumers. 
A) producers and consumers are free to communicate with one another. 
B) producers and consumers both respond to the same price. 
C) consumers must accept the prices set by producers. 
D) producers must accept the price set by consumers.

Question 3

If the MU of half gallon of milk is $3.50 and the MU of gallon of milk is $3.25, and they both sell for the same price, we would expect consumers to

Accepted Answer

A) increase their purchases of gallons of milk. 
B) increase their purchases of half gallons of milk. 
C) not change their purchasing habits. 
D) buy only gallons of milk. 
A) increase their purchases of gallons of milk. 
B) increase their purchases of half gallons of milk. 
C) not change their purchasing habits. 
D) buy only gallons of milk.

Question 4

The price system automatically leads to an efficient allocation of inputs among the different production processes.

Accepted Answer

A) True 
 B)False

Question 5

In a market economy, goods are allocated to

Accepted Answer

A) all potential uses. 
B) all citizens on an equal basis. 
C) citizens with political power. 
D) citizens with both the desire and the willingness to pay for the goods. 
A) all potential uses. 
B) all citizens on an equal basis. 
C) citizens with political power. 
D) citizens with both the desire and the willingness to pay for the goods.

Exam 14: The Case for Free Markets: the Price System

Laissez faire refers to a program of minimal interference in the market system.

MC and MU are set equal to one another in a market economy because

If the MU of half gallon of milk is $3.50 and the MU of gallon of milk is $3.25, and they both sell for the same price, we would expect consumers to

The price system automatically leads to an efficient allocation of inputs among the different production processes.

In a market economy, goods are allocated to

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

Securities: Business Finance and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Shortcomings of Free Markets

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

Is Useconomic Leadership Threatened

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

He Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

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