The essential difference between a command economy and market economy is that in a market econ.

buyers and sellers determine resource allocation.

You buy a dinner at a restaurant for 20 percent off the regular price. In this exchange,

you and the restaurant benefit.

When there is a surplus of a product in a competitive market, it is usually the case that the

market price of the product will eventually decrease.

Which is a basic economic question that must be answered by all economic systems?

Which goods and services will be produced?

In every economic system, people must choose how to

make the best use of scarce resources.

Which best describes the law of comparative advantage? It's beneficial to export goods that are

produced at low opp. costs & import goods at high opp. cost.

Congress wants to increase the general level of tariffs. If this occurs, then we should expect

a decrease in imports into the U.S.

From an economic point of view, which approach to controlling pollution is most efficient?

Reduce pollution as long as addt'l benefits outweigh costs.

The specialization of labor usually results in

an increase in output per hour worked.

A newspaper reports, "COFFEE GROWERS' MONOPOLY BROKEN INTO SEVERAL FIRMS." If true, then they

will increase output and decrease prices.

If the gov't charges a new tax of $1 on all jeans sold, which would most likely result?

Consumers pay higher price and buy fewer pairs of jeans.

Businesses want to sell products at high prices. Consumers want to buy products at low prices.

The conflict is resolved by competition.

The major purpose of the commercial banking system in the economy is to

loan funds from depositors to credit-worthy borrowers.

Which is most essential for an efficient market economy?

Active competition in the marketplace.

Exchange rates between the $ and Japanese yen change from $1/100 yen to $1/125 yen. This means

there will be a decrease in U.S. exports to Japan.

The opportunity cost of a new city park is the

best alternative use of resources given up for the the park.

Which would most likely decrease the quantity of corn sold in a competitive market?

An increase in the price of fertilizer.

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ECON. REVIEW, PART 1, FORM B

23 termsStudBud Administration216 plays

Econ literacy test, form B

Flashcards23 cardsFPractice quizPHost liveL

Questions 23

Answers

1
Which item is included in the basic money supply in the U.S.?
Corporate bonds.
Silver.
Gold.
Checking account deposits.
2
The essential difference between a command economy and market economy is that in a market econ.
C.econ. create an effective incentive system for cons./prod.
buyers and sellers determine resource allocation.
prices of products/resources are largely determined by gov't
shortages occur more often than surpluses.
3
You buy a dinner at a restaurant for 20 percent off the regular price. In this exchange,
the restaurant benefits, but you do not.
you and the restaurant benefit.
you benefit, but the restaurant does not.
neither you nor the restaurant benefits.
4
When there is a surplus of a product in a competitive market, it is usually the case that the
market price of the product will eventually increase.
quantity exchanged in the market will decrease.
market price of the product will eventually decrease.
quantity exchanged in the market will increase.
5
Which is a basic economic question that must be answered by all economic systems?
How will corporations be organized?
How can markets be kept competitive?
Which goods and services will be produced?
Which form of central planning will the government use?
6
In every economic system, people must choose how to
save money to reduce the national debt.
make the best use of scarce resources.
satisfy all of the wants of society.
create an equal distribution of income.
7
Which best describes the law of comparative advantage? It's beneficial to export goods that are
produced at high opp. cost & import goods at low opp. cost.
enjoyed the least by people & import goods enjoyed the most.
produced at low opp. costs & import goods at high opp. cost.
enjoyed the most by people & import goods enjoyed the least.
8
Congress wants to increase the general level of tariffs. If this occurs, then we should expect
an increase in U.S. exports to other nations.
a decrease in U.S. inflation.
a decrease in U.S. import quotas.
a decrease in imports into the U.S.
9
Which do economists consider to be a productive resource (factor of production)?
Labor.
Interest.
Money.
Profit.
10
From an economic point of view, which approach to controlling pollution is most efficient?
Abolish use of toxic chemicals in all production.
Reduce pollution as long as addt'l benefits outweigh costs.
Adopt laws that prohibit activities that cause pollution.
Use economic resources to eliminate all pollution.
11
The specialization of labor usually results in
a decrease in economic growth.
a more equal distribution of income.
an increase in infatuation.
an increase in output per hour worked.
12
When workers join unions and elect representatives to negotiate with employers, it's called
collective bargaining.
a closed shop.
right to work legislation.
the seniority system.
13
If the gov't decides to increase payroll taxes on wages/salaries of workers, then there will be
an increase in saving.
an increase in investments.
a decrease in consumption.
a decrease in unemployment.
14
A newspaper reports, "COFFEE GROWERS' MONOPOLY BROKEN INTO SEVERAL FIRMS." If true, then they
will decrease output and decrease prices.
will increase output and increase prices.
will decrease output and increase prices.
will increase output and decrease prices.
15
If the gov't charges a new tax of $1 on all jeans sold, which would most likely result?
Consumers pay higher price and buy fewer pairs of jeans.
Sellers increase quantity sold to make up for taxes paid.
Consumers pay higher price and sellers make larger profits.
Consumers pay higher price and sellers limit the # of jeans.
16
Businesses want to sell products at high prices. Consumers want to buy products at low prices.
The conflict is resolved by competition.
The conflict is resolved by lawsuits.
The conflict is resolved by collective bargaining.
The conflict is resolved by gov't regulation.
17
The price of oranges increased and the quantity sold decreased. This is a result of
an increase in demand.
a decrease in supply.
A decrease in demand.
an increase in supply.
18
The major purpose of the commercial banking system in the economy is to
earn a rate of return on money invested with go't agencies.
hold financial assets for the Federal Reserve System.
sell corporate stocks and bonds.
loan funds from depositors to credit-worthy borrowers.
19
Which is most essential for an efficient market economy?
Strong gov't regulation.
Responsible decisions by business leaders.
Active competition in the marketplace.
Effective labor unions.
20
Exchange rates between the $ and Japanese yen change from $1/100 yen to $1/125 yen. This means
U.S. goods will be less expensive for Japanese.
there will be a decrease in U.S. exports to Japan.
there will be an increase in U.S. exports to Japan.
Japanese goods will be more expensive for Americans.
21
The opportunity cost of a new city park is the
best alternative use of resources given up for the the park.
lack of personal incentive to take care of a public park.
increased congestion from traffic around the park.
cost of staff and maintenance for the park.
22
Which would most likely decrease the quantity of corn sold in a competitive market?
A decrease in the price of farm equipment.
An increase in the price of fertilizer.
An improvement in the technology of growing corn.
An increase in the incomes of consumers.
23
Profits are equal to total
assets minus total liabilities.
revenue minus total cost.
sales minus taxes and depreciation.
sales minus wages and salaries.

ECON. REVIEW, PART 1, FORM B Flashcards | StudBud