What is the? circular-flow diagram and what does it? illustrate?
answer
The? circular-flow diagram shows how households and firms are linked through product and factor markets.
question
What are the two main categories of participants in? markets?
answer
Firms and households.
question
Which participants are of greatest importance in determining what goods and services are? produced?
answer
Households.
question
What is a free? market?
answer
A free market is one where the government does not control the production of goods and services.
question
In what ways does a free market economy differ from a centrally planned? economy? Unlike a free market? economy,
answer
centrally planned economies have extensive government controls.
question
What is an? entrepreneur?
answer
Entrepreneurs operate businesses that produce goods and services.
question
Why do entrepreneurs play a key role in a market? system?
answer
They bring together factors of production.
question
What are private property? rights? Private property rights? are:
answer
the rights individuals and firms have to the exclusive use of? tangible, physical property and intellectual property.
question
What role do they play in the working of a market? system? Private property? rights:
answer
encourage a significant number of people to be willing to risk funds by investing them in business.
B.
encourage firms to spend money on research and development.
correct
both a and b.
question
Why are independent courts important for a? well-functioning economy? Independence is necessary for? courts:
answer
A.
to make their decisions free of intimidation by criminal gangs.
B.
to make their decisions based on the law.
C.
to make their decisions free of influence from other parts of the government.
D.
to make their decisions free of influence from people with powerful political connections.
Correct
E.
all of the above.
question
Evaluate the following? argument: "Adam? Smith's analysis is based on a fundamental? flaw: He assumes that people are motivated by? self-interest. But this? isn't true. ? I'm not? selfish, and most people I know? aren't selfish."
answer
This statement is based on the misconception that following your? self-interest and being selfish are the same thing.
question
Writing in the New York Times?, Michael Lewis argued that
?"...a market economy is premised on a system of incentives designed to encourage an ignoble human? trait: self-interest."
?Source: Michael? Lewis, "In Defense of the? Boom." New York? Times, October? 27, 2002.
What incentives does a market system provide to encourage? self-interest?
answer
Financial reward.
question
In? economics, the term capital refers to
answer
C.
goods used to produce other goods.
question
?A(n)
entrepreneur
is someone who operates a? business, bringing together the factors of productionlong dash?labor, ?capital, and natural resourceslong dashto produce goods and services.
answer
entrepreneur
question
In economic? terminology, the inputs used to produce output are referred to as
answer
factors of production.
question
In a free? market, the actions people take are largely determined by
answer
D.
the motivation of financial reward.
question
A free market exists
answer
when the government places few restrictions on how a good or a service can be produced or sold or on how a factor of production can be employed.
question
Which of the following are examples of intellectual? property? ?(Check all that? apply.)
answer
software
books and films
ideas for new products or new production techniques
question
The government seeks to protect intellectual property rights by granting
answer
A.
patents.
B.
copyrights.
correct:
both A and B
question
The Scottish philosopher Adam Smith argued in 1776 that
answer
prices would do a better job of coordinating the activities of buyers and sellers than guilds could.
question
The primary difference between product markets and factor markets is that
answer
product markets are markets for? goods, while factor markets are markets for factors of productionlong dash?labor, ?capital, natural? resources, and entrepreneurial ability.
question
Property rights are
answer
the rights individuals or firms have to the exclusive use of their? property, including the right to buy or sell it.
question
What is the outcome of enforcing contracts and property rights in a market? system?
answer
increased economic activity
question
If a market system functions? well, which of the following is necessary for the enforcement of contracts and property? rights?
answer
.
an independent court system
question
According to Adam? Smith, which of the following is necessary for the proper functioning of the market? system
answer
For markets to? work, people must be free to pursue their? self-interest.
question
According to Adam? Smith, which of the following is the instrument the invisible hand uses to direct economic? activity?
answer
C.
prices
question
In our class discussion we highlighted the argument made by Austrian economist Friedrich Hayek? (1899-1992) that the ?"economic problem of society?" is really
answer
about utilizing knowledge that no one person has in totality.
Haven't found what you need?
Search for quizzes and test answers now
Quizzes.studymoose.com uses cookies. By continuing you agree to our cookie policy
