Microeconomics Chapter 2 (true/false), Professor Biery – Flashcards

109. Market economies use capital goods because they improve productive efficiency.

Money functions as a medium of exchange by eliminating the need for a coincidence of wants.

Consumer sovereignty means that legislation now protects the rights of consumers to dispose of their incomes as they see fit.

Specialization may expand total output even though the individuals involved may have identical abilities.

The wants of consumers are expressed in the product market with "dollar votes."

Costs can be defined as total payments made to workers, land owners, and capital suppliers less payments to the entrepreneur for organizing and combining the other resources used to produce a good.

Continued losses in an industry will cause some firms to reduce output or eventually leave the industry

The guiding function of prices tends to keep resources flowing toward their most highly valued uses.

The invisible hand refers to the many indirect controls that the federal government imposes in a market system.

Central planning in the Soviet Union and pre-reform China emphasized the expansion of the production of consumer goods to raise the domestic standard of living.

Central planning often suffers from a coordination problem and an incentive problem.

Specialization may expand total output even though the individuals involved may have identical abilities.