Exam 2: The Market System and the Circular Flow

According to the circular flow model of the market system, when resource-owners' money income is rising, then the costs to business firms that employ their resources must be falling.

The government may impose industrial safety regulations and occupational licensing requirements in which of the following economic systems?

Competition is more likely to exist when

The concept of consumer sovereignty refers to the situation where consumers have the right to vote for the board of directors of large corporations.

The competitive market system

The simple circular flow model shows that

Answer the question on the basis of the following information: Suppose 30 units of product A can be produced by employing just labor and capital in the four ways shown below. Assume the prices of labor and capital are $2 and $3, respectively. Which technique is economically most efficient in producing A?

Answer the question using the following data, which show all available techniques for producing 20 units of a particular commodity Assuming that the firm is motivated by self-interest and that the 20 units that can be produced with each technique can be sold for $2 per unit, the firm will

In a market system, the task of assessing and managing the business risk of a firm is taken on by the firm's

Freedom of enterprise

Which of the following does not foster innovation and technological advance?

In the circular flow model of the market system, business firms' major role is to

The market system

According to the concept of the "invisible hand," if Susie opens and operates a profitable childcare center, then

In a competitive market economy, firms and resource suppliers seeking to further their own self-interest will end up, as though guided by an invisible hand, promoting the public interest.

Economic efficiency entails producing a certain output with the minimum number of units of inputs.

Households and businesses are

Which of the following best illustrates the circular flow model in action?

The following table illustrates alternative production techniques for producing 18 widgets that can be sold for $1 each for a total revenue of $18. Using technique A will result in an

Which of the following is not one of the five fundamental questions?