Exam 2: The Market System and the Circular Flow

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

The following table illustrates alternative production techniques for producing 18 widgets that can be sold for $1 each for a total revenue of $18. Refer to the above table. At the $3 price for labor the most efficient technique will result in an:

Government bailouts of failing businesses, like banks during the recent economic crisis, will tend to reduce the motivation among entrepreneurs to make prudent decisions is dealing with business risk.

The market system is said to be characterized by "consumer sovereignty." This is because:

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

In a market system, entrepreneurs start up businesses in order to earn a high salary.

An increase in the demand for a product and a reduction in its costs of production would:

Consumers express self-interest when they:

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

With specialization in a market economy, individual:

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

Which is true of an economy which operates entirely through central planning?

If a nation restricts trade with other nations, then the most likely effect is:

The following table illustrates alternative production techniques for producing 18 widgets that can be sold for $1 each for a total revenue of $18. Based on the data given in the table above, the most economically efficient production technique is:

Suppose a firm can produce 70 units of a product, Zenia, by combining labor, land, capital, and entrepreneurial ability, as in the four alternative techniques shown in the table below. Assume further that the firm can hire labor at $3 per unit, land at $3 per unit, capital at $6 per unit, and entrepreneurship at $9 per unit. Refer to the above table, and suppose that the firm uses production technique D If each of the 70 units of Zenia that are produced sells for $1 apiece, then how much will be the profits of the firm from 70 units?

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:

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

A characteristic of centrally planned economies is that:

The fundamental economic question regarding the distribution of output in the economy is equivalent to the question of who will produce the output.

The development of the digital video and camera which replaced film cameras is an example of: