Question 1

The necessity for choice, in economics, arises from

Accepted Answer

A) high incomes and many goods. 
B) scarcity of economic means for satisfying economic wants. 
C) scarcity of time and knowledge, and numerous similar goods. 
D) All of the above are correct. 
A) high incomes and many goods. 
B) scarcity of economic means for satisfying economic wants. 
C) scarcity of time and knowledge, and numerous similar goods. 
D) All of the above are correct.

Question 2

Distribution is a major question to be answered by any economic system.

Accepted Answer

A) True 
 B)False

Question 3

What makes production-planning a daunting task for central planners?

Accepted Answer

Because the output required from any one

Question 4

For a rational consumer, the consumer's surplus will never be a negative number.

Accepted Answer

A) True 
 B)False

Question 5

Higher prices may serve the public interest when:

Accepted Answer

A) ​there is a shortage of goods or services available 
B) ​there is an uneven distribution of traffic on alternate routes 
C) ​higher prices never serve the public interest 
D) ​both a and b 
A) ​there is a shortage of goods or services available 
B) ​there is an uneven distribution of traffic on alternate routes 
C) ​higher prices never serve the public interest 
D) ​both a and b

Question 6

The assignment of inputs to specific industries by central planners is made difficult by

Accepted Answer

A) the interdependency among industries. 
B) lack of data for decision making. 
C) the danger of a chain reaction among industries if an error is made at any point. 
D) All of the above are correct. 
A) the interdependency among industries. 
B) lack of data for decision making. 
C) the danger of a chain reaction among industries if an error is made at any point. 
D) All of the above are correct.

Question 7

The existence of a universal law of scarcity creates pressures on societies to

Accepted Answer

A) use their resources according to government plans. 
B) economize in the use of their resources. 
C) allocate their resources equitably. 
D) exploit their resources. 
A) use their resources according to government plans. 
B) economize in the use of their resources. 
C) allocate their resources equitably. 
D) exploit their resources.

Question 8

Figure 14-3
  
-In Figure 14-3, if person 1 and person 2 have the indicated quantities of cheese and crackers, and are on the indicated indifference curves, is there the possibility of mutually beneficial trade?
 Explain.

Accepted Answer

Yes.For person 1, the marginal utility o

Question 9

In order for a central planner to achieve the invisible-hand type efficiency of a free market, the planner would

Accepted Answer

A) need masses of statistics. 
B) be required to makes enormous calculations. 
C) need to be able to measure a consumer's marginal utility in order to equate MU with MC. 
D) All of the above would be required. 
A) need masses of statistics. 
B) be required to makes enormous calculations. 
C) need to be able to measure a consumer's marginal utility in order to equate MU with MC. 
D) All of the above would be required.

Question 10

Mutually beneficial trade is possible because of differing marginal utilities.

Accepted Answer

A) True 
 B)False

Question 11

How does a laissez-faire economy decide which consumer gets each of the goods that has been produced?

Accepted Answer

The price mechanism solves the distribut

Question 12

Economics can decide

Accepted Answer

A) the appropriate trade-off between fairness and efficiency. 
B) which pricing arrangements are fair and which are unfair. 
C) whether a pricing decision will impose heavy inefficiency costs on society. 
D) All of the above are correct. 
A) the appropriate trade-off between fairness and efficiency. 
B) which pricing arrangements are fair and which are unfair. 
C) whether a pricing decision will impose heavy inefficiency costs on society. 
D) All of the above are correct.

Question 13

Questions of what to produce, how much to produce, and who will get the output must be faced by

Accepted Answer

A) market economies. 
B) centrally planned economies. 
C) the economies of underdeveloped countries. 
D) all economies. 
A) market economies. 
B) centrally planned economies. 
C) the economies of underdeveloped countries. 
D) all economies.

Question 14

Is peak pricing economically efficient?
 Explain.Give an example to illustrate your answer.

Accepted Answer

Yes.Economic efficiency requires that pr

Question 15

Prices influence the distribution of income by making the distribution fairer.

Accepted Answer

A) True 
 B)False

Question 16

Economics tells us which resource allocations are preferable.

Accepted Answer

A) True 
 B)False

Question 17

For economic efficiency, which of the following conditions should be met?

Accepted Answer

A) Scarcer goods should have lower prices. 
B) More abundant goods should have lower prices. 
C) More abundant goods should have higher prices. 
D) All goods should have equal prices. 
A) Scarcer goods should have lower prices. 
B) More abundant goods should have lower prices. 
C) More abundant goods should have higher prices. 
D) All goods should have equal prices.

Question 18

The production possibilities frontier illustrates

Accepted Answer

A) the constant rate of technological progress. 
B) the fundamental concept of scarcity. 
C) the rapid growth of the U.S.economy. 
D) that guns always trade for butter. 
A) the constant rate of technological progress. 
B) the fundamental concept of scarcity. 
C) the rapid growth of the U.S.economy. 
D) that guns always trade for butter.

Question 19

Mutually beneficial trade is impossible when different persons have different preferences about goods and services.

Accepted Answer

A) True 
 B)False

Question 20

Market systems can be evaluated as efficient or inefficient, but not as fair or unfair.

Accepted Answer

A) True 
 B)False

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

The necessity for choice, in economics, arises from

Distribution is a major question to be answered by any economic system.

What makes production-planning a daunting task for central planners?

For a rational consumer, the consumer's surplus will never be a negative number.

Higher prices may serve the public interest when:

The assignment of inputs to specific industries by central planners is made difficult by

The existence of a universal law of scarcity creates pressures on societies to

Figure 14-3 -In Figure 14-3, if person 1 and person 2 have the indicated quantities of cheese and crackers, and are on the indicated indifference curves, is there the possibility of mutually beneficial trade? Explain.

In order for a central planner to achieve the invisible-hand type efficiency of a free market, the planner would

Mutually beneficial trade is possible because of differing marginal utilities.

How does a laissez-faire economy decide which consumer gets each of the goods that has been produced?

Economics can decide

Questions of what to produce, how much to produce, and who will get the output must be faced by

Is peak pricing economically efficient? Explain.Give an example to illustrate your answer.

Prices influence the distribution of income by making the distribution fairer.

Economics tells us which resource allocations are preferable.

For economic efficiency, which of the following conditions should be met?

The production possibilities frontier illustrates

Mutually beneficial trade is impossible when different persons have different preferences about goods and services.

Market systems can be evaluated as efficient or inefficient, but not as fair or unfair.

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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