In a free-market economy, who decides who consumes the goods and services produced?

indiviuduals, based on what they are willing and able to buy

1. Which of the following is the kind of decisionthat can be made on the margin?

a. Whether or not to hire new workers

A socialist society has a more flexible command economy than a communist society because:

some free market practices can combine w/ central planning

Human capitial refers to:

Knowledge gained from education andexperience

The ways that factors of production are combined determines the answer to which econ question?

How will goods and services be produced

Each society should answer the three basic economic questions based on:

its unique combination of values and goals

Which of the following is an example of changing physical capital?

building extra space in a factory

The law of increasing cost states that as production shifts from one item to another:

more and more resources are needed to produce the 2nd item

Which is NOT a question that every economy must answer?

Why should goods and services be produced?

What was Karl Marx's criticism of capitalist economics?

labor was exploited and wealth unequally distributed

A key difference between North Korea and China is that:

China is privatizing state-run businesses

Which of the following might be an advantage ofcommand economies?

a. Low unemployment due to guaranteed jobs

What must happen to shift production from point A to point C?

The economy must give up refrigerators

The ways that factors of production are combined determines the answer to which econ question?

How will goods and services be produced

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Econ Fundamentals & Systems (CH.1&2)

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Questions 31

Answers

1
___ is a major goal of socialist economies, while ___ is a major goal of capitalist economies
efficiency; equity
authoritarianism; isolationism
equity; freedom
innovation; security
2
In a free-market economy, who decides who consumes the goods and services produced?
the government, based on how they distribute resources
Firms, based on what they produce
no one decides
indiviuduals, based on what they are willing and able to buy
3
According to Adam Smith, what "invisible hand" regulates the free-market economy?
specialization
economic equity
competition and self-interest
government intervention
4
1. Which of the following is the kind of decisionthat can be made on the margin?
a. Whether or not to go on vacation
a. Whether or not to hire new workers
a. Whether or not to have a snake or a turtle as apet
a. Whether or not to build an extra room on a home
5
A socialist society has a more flexible command economy than a communist society because:
the central government has all economic and political power
an authoritarian government controls the economy
some free market practices can combine w/ central planning
the centers of economic power are all under private control
6
_____ limits the supply of the factors of production.
Labor
Scarcity
Government
Technology
7
Human capitial refers to:
Members of a nation’s work force
All natural resources employed by laborers
The sum of all expenditures by a nation’sworking population
Knowledge gained from education andexperience
8
In the factor market, who sells the factors of production for money?
central governments
households
firms
state governments
9
The ways that factors of production are combined determines the answer to which econ question?
What will be produced
How we will achieve a safety net
Who will consume goods and services
How will goods and services be produced
10
All economies are in reality ____________ economies.
laissez faire
traditional
command
mixed
11
Each society should answer the three basic economic questions based on:
the number of factor payments it makes
its unique combination of values and goals
its degree of economic
the desire to achieve economic freedom
12
Which of the following is an example of changing physical capital?
building extra space in a factory
switching to cheaper fuel
lowering workers wages
hiring more workers to do a job
13
The law of increasing cost states that as production shifts from one item to another:
more and more resources are needed to produce the 2nd item
the cost of production gets cheaper and cheaper
the land costs rise more steeply than do the labor costs
the cost of producing each item stays the same
14
ati
build a company cafeteria
provide worker training
hire more part-time workers
give company cars to employees
15
Markets exist primarily because
no one is self-sufficient
firms need to make a profit
people desire economic security
we need to maintain a competitive soceity
16
At what point on this curve is the economy operating least efficiently?
X
C
A
Y
17
In the product market, what do firms sell in exchange for money?
economic security
the factors of production
consumer goods and services
land, labor, and capital
18
In a free-market economy, who owns the factors of production?
firms
households
state governments
the federal government
19
Which is NOT a question that every economy must answer?
Who will consume the goods and services produced?
Why should goods and services be produced?
How should goods and services be produced?
What goods and services should be produced?
20
What was Karl Marx's criticism of capitalist economics?
it leads to competition that morally corrupts society
it provides too many free services to those who fail to work
labor was exploited and wealth unequally distributed
it resulted in great inefficiency
21
5th & 14th Amendments protect individual citizen's _____, which makes a free-market possible
right to free-trade and commerce
right to bear arms
private property rights
voting rights
22
A key difference between North Korea and China is that:
N.Korea does not have a command economy
China does not allow ownership of private property
N.Korea has begun to introduce free-market practices
China is privatizing state-run businesses
23
Which of the following might be an advantage ofcommand economies?
a. Quick adjustment to changing conditions
a. Low unemployment due to guaranteed jobs
a. Incentives for workers to be innovative
a. High levels of consumer satisfaction
24
The selling of government-run firms, which are then allowed to compete in the market
off-shoring
laissez faire
mobilization
privitization
25
What must happen to shift production from point A to point C?
The economy must give up refrigerators
There must be a recession
The economy must give up cars
There must be economic growth
26
The U.S. government intervenes in the economy in order to:
place barriers on foreign trade
provide competition for firms
promote the general welfare
protect laissez faire
27
Economic system where the economic forces of self-interest and competition almost non-existent
laissez faire economy
free-market economy
mixed economy
centrally-planned economy
28
The idea that our society has decided that police officers will be employed by the government:
we live in a purely free-market economy
we lived in a centrally-planned economy
we do not have the right to private property
we live in a mixed economy
29
To improve its standard of living, a nation's economy must
allow the central government to make decisions
achieve economic equity
grow through innovation
remain stable
30
The ways that factors of production are combined determines the answer to which econ question?
How will goods and services be produced
Who will consume goods and services
What will be produced
How we will achieve a safety net
31
If you choose between two summer jobs, the one you do not choose is called:
the opportunity cost
the marginal benefit
the marginal cost
the trade-off

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