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How Markets Work Review Flashcards | StudBud
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How Markets Work Review
How Markets Work Review
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Answers
1
What are the two markets in a "basic" Circular Flow model?
Goods and Services Market
Labor and Goods Markets
Resource and Product Markets
Natural and Capital Markets
2
Antitrust laws allow the government to break up monopolies.
True
False
3
An example of a non-price determinant of supply would be...
Consumer's expectations
Producer's expectations
The average price of a good
Elasticity
4
While a command economy may be efficient in a crisis, it is...
able to effieciently supply people's wants and needs.
a form of mixed economy.
more productive than a market economy.
less efficient in daily life.
5
What is the goal of a social safety net?
To help the poor and reduce poverty
To make sure that businesses don't fail from unexpected downturns
To protect the government from too many costs
6
What is supply elasticity?
A measure of how much of a good is being produced.
How responsive supply is to price changes.
How likely consumers are to buy more of a good if more is supplied.
How responsive supply is to a change in costs of production.
7
The money households spend to purchase goods and services is called..
Income
Expenditures
Input
Output
8
According to Adam Smith, why do the butcher, brewer, and baker provide people with food?
Benevolence
Their own self-interest
Because the government tells them to
Because they enjoy it
9
What is the free rider problem?
When one company increases production to meet increased demand
When someone doesn't pay for their bus ride
When somebody benefits from a service, but doesn't pay for it
10
The point where supply equals demand.
Market equilibrium
Disequalibrium
Command point
Inflection point
11
The cost of an economic action in terms of actions you did not take is called...
Production cost
Marginal cost
Market equilibrium
Opportunity cost
12
An economy with a free market and some government intervention is called a...
Mixed economy
Market economy
Command economy
Traditional economy
13
In the Circular Flow model, Households have goods and services, but want productive resources.
True
False
14
Who are the two "players" in a basic Circular Flow model?
Government and Businesses
Government and Consumers
Government and Households
Households and Businesses
15
The role of prices is to determine...
Who produces?
Who gets to consume?
How to produce?
What to consume?
16
Externalities can be positive or negative.
True
False
17
A market in which there are a few powerful firms is called...
Perfect competition
Oligopoly
Monopoly
Monopolistic competition
18
When price decreases supply...
stays the same
isn't needed
increases
decreases
19
The Circular Flow Model demonstrates how money and productive resources flow through an economy.
False
True
20
Which of these is an example of a barrier to entry?
The social safety net
High startup costs
Free trade
Perfect competition
21
As price increases demand...
stays the same
decreases
increases
22
Which of these would be a public good?
Clean air
Mail delivery
A hamburger
Fish in the ocean
23
What does the government try to do with externalities?
Try to protect the interests of businesses
Promote all externalities
Maximize positive externalities and minimize negatives externalities
Minimize positive externalities
24
An example of a non-price determinant of demand is...
A change in price
Costs of related goods
Costs of production
The whims of a producer
25
In a market economy, who owns most property?
Private individuals and firms
The church
The government
Workers' collectives
26
Linear demand curves show the relationship between...
price and quantity demanded.
production costs and price.
supply and demand.
price and quantity supplied.
27
A price ceiling will likely cause...
The government to have less power
A more efficient economy
A shortage of goods
A surplus of goods
28
What is the advantage of specialization?
It provides goods and services for all of the public
It increases the price of goods
It increases efficiency
It makes sure companies lower prices
