Question 1

In a market system, employees and suppliers

Accepted Answer

A)   are usually shielded from risk, but at the cost of not sharing in the profits of the firm.
B)   are usually shielded from risk and share in the profits of the firm.
C)   are generally subject to as much risk as firm owners but get to share in the profits.
D)   bear as much risk as firm owners but don't get to share in the profits.E) A) and B)
F) None of the above

Question 2

Answer the question using the following data, which show all available techniques for producing 20 units of a particular commodity  In view of the indicated resource prices, the economically most efficient production technique(s)  is (are)  technique(s)

Accepted Answer

A)   1.
B)   2 and 4.
C)   3.
D)   1 and 3.E) C) and D)
F) A) and C)

Question 3

In a market system, the income earned by owners of natural resources is called interest income.

Accepted Answer

A) True 
 B)False

Question 4

The market system's answer to the fundamental question "How will the system promote progress?" is essentially

Accepted Answer

A)   "Through government-funded research programs."
B)   "Through redistribution of income to promote greater equality."
C)   "Through training and retraining programs."
D)   "Through the profit potential that encourages development of new technology."E) None of the above
F) B) and C)

Question 5

In a market system, which of the following is a major benefit of making the firm's owners and investors exclusively shoulder the business risk?

Accepted Answer

A)   Those who deeply dislike business risk will not have anything to do with the business.
B)   This allows firms to more easily attract labor and other suppliers of inputs.
C)   This reduces the business risk in the economy.
D)   It makes it easier for the government to monitor and manage the business risk.E) All of the above
F) C) and D)

Question 6

Which of the following statements is true about risk management in market systems versus command systems?

Accepted Answer

A)   Market systems manage risk better because entrepreneurs taking risks bear the costs of poor decisions, whereas in command systems government decision makers don't bear those costs.
B)   Neither system is better than the other in terms of risk management; both systems are equally susceptible to natural disasters and changes in consumer preferences.
C)   Command systems manage risk better because the government controls most economic activity and can therefore eliminate risk.
D)   Market systems face risk because of the possibility of profits and losses; command systems don't face risk because they are not profit driven.E) B) and C)
F) B) and D)

Question 7

The invisible hand concept suggests that

Accepted Answer

A)   market failures imply the need for a national economic plan.
B)   big businesses are inherently more efficient than small businesses.
C)   the competitiveness of a capitalistic market economy invariably diminishes over time.
D)   assuming competition, private and public interests will coincide.E) C) and D)
F) A) and D)

Question 8

In a market system, more resources will move toward an industry and expand its production if the industry has

Accepted Answer

A)   positive revenues.
B)   positive costs.
C)   TC 
D)   TC > TR.E) None of the above
F) B) and D)

Question 9

(Consider This)  Which of the following statements about insurance and risk is true?

Accepted Answer

A)   Insurance inhibits economic growth and investment by discouraging risk-taking.
B)   Insurance transfers risk from those with a high tolerance for risk to those with a low tolerance for risk.
C)   Insurance companies always earn profits because insurance premiums always exceed the payout for insured events.
D)   Insurance transfers risk from those with a low tolerance for risk to those with a higher tolerance for risk.E) B) and C)
F) B) and D)

Question 10

In a market system, a consumer's ability to pay-but not necessarily his willingness to pay-is largely based on his income.

Accepted Answer

A) True 
 B)False

Question 11

International specialization and trade

Accepted Answer

A)   has to be done on a barter system.
B)   often requires the exchange of currencies.
C)   does not illustrate the division of labor.
D)   requires active government regulation.E) A) and D)
F) A) and C)

Question 12

In the circular flow diagram, households get their ability to pay for their consumption expenditures from the

Accepted Answer

A)   revenues they receive for their products.
B)   costs they incur for resources.
C)   incomes they earn for their resources.
D)   goods and services they get in the product markets.E) A) and B)
F) A) and C)

Exam 2: The Market System and the Circular Flow

Which of the following statements is true about risk management in market systems versus command systems?

Correct Answer
verified

In a market system, a consumer's ability to pay-but not necessarily his willingness to pay-is largely based on his income.

Correct Answer
verified

In a market system, the income earned by owners of natural resources is called interest income.

Correct Answer
verified

The invisible hand concept suggests that

Correct Answer
verified

The market system's answer to the fundamental question "How will the system promote progress?" is essentially

Correct Answer
verified

(Consider This) Which of the following statements about insurance and risk is true?

Correct Answer
verified

In a market system, employees and suppliers

Correct Answer
verified

International specialization and trade

Correct Answer
verified

In the circular flow diagram, households get their ability to pay for their consumption expenditures from the

Correct Answer
verified

In a market system, which of the following is a major benefit of making the firm's owners and investors exclusively shoulder the business risk?

Correct Answer
verified

Answer the question using the following data, which show all available techniques for producing 20 units of a particular commodity In view of the indicated resource prices, the economically most efficient production technique(s) is (are) technique(s)

Correct Answer
verified

In a market system, more resources will move toward an industry and expand its production if the industry has

Correct Answer
verified

Exam 2: The Market System and the Circular Flow

Which of the following statements is true about risk management in market systems versus command systems?

Correct AnswerverifiedShow Answer

In a market system, a consumer's ability to pay-but not necessarily his willingness to pay-is largely based on his income.

Correct AnswerverifiedShow Answer

In a market system, the income earned by owners of natural resources is called interest income.

Correct AnswerverifiedShow Answer

The invisible hand concept suggests that

Correct AnswerverifiedShow Answer

The market system's answer to the fundamental question "How will the system promote progress?" is essentially

Correct AnswerverifiedShow Answer

(Consider This) Which of the following statements about insurance and risk is true?

Correct AnswerverifiedShow Answer

In a market system, employees and suppliers

Correct AnswerverifiedShow Answer

International specialization and trade

Correct AnswerverifiedShow Answer

In the circular flow diagram, households get their ability to pay for their consumption expenditures from the

Correct AnswerverifiedShow Answer

In a market system, which of the following is a major benefit of making the firm's owners and investors exclusively shoulder the business risk?

Correct AnswerverifiedShow Answer

Answer the question using the following data, which show all available techniques for producing 20 units of a particular commodity In view of the indicated resource prices, the economically most efficient production technique(s) is (are) technique(s)

Correct AnswerverifiedShow Answer

In a market system, more resources will move toward an industry and expand its production if the industry has

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified