Econ 201 Ch. 2: The Market System – Flashcards

Economic systems differ from one another based on who own the factors of production and:

Which of the following would be primarily determined in the resource markets?

The government may impose industrial safety regulations and occupational licensing requirements in which of the following economic systems?

By freedom of enterprise, we mean that individual:

According to the circular flow model of the market system, when resource-owners' money income is rising, then the costs to business firms must be falling.

Anything that is generally acceptable in trading for goods and services is a:

In a capitalist system, the decisions and actions of millions of consumers and firms are highly coordinated by:

A corporation is a type of business firm where the debt of the firm is considered its owners' personal responsibility.

Capital accumulation in a market system results from:

The following table illustrates alternative production techniques for producing 18 widgets that can be sold for $1 each for a total revenue of $18. Refer to the above table. If the price per unit of labor were to increase from $2 to $3, the most efficient production technique would then be:

In the circular flow model of the market system, business firms:

Insurance companies facilitate the transfer of risk from:

Which of the following would not be emphasized in a capitalist economy?

Competition is more likely to exist when:

Maximum profits are what motivate consumers to decide who will get the goods and services in a market system.

What, according to economist Donald Boudreaux in the "Last Word" section of the chapter, best explains why the market system is not a random, chaotic mess?

Refer to the above figure. If box A represents households, D the resource market, and C businesses, then flow (8) would represent ___ while flow (7) would represent ___.

If people tried to produce as much of what they need on their own, then this would lead to a more efficient use of the economy's resources.

Refer to the above figure. If box A represents households, B the product market, and C businesses, and if flow (3) represents revenues, then flow (1) would represent:

Which of the following statements about the right to private ownership is false?

The "invisible hand" concept refers to the:

Which of the following best describes the "invisible hand" concept?

Private ownership and property rights in a market system have the following implications, except:

The concept of consumer sovereignty refers to the situation where consumers have the right to vote for the board of directors of large corporations.

In a market system, the task of assessing and managing the business risk of a firm is taken on by the firm's:

Even with the use of money, exchange and trade cannot occur if there is no coincidence of wants.

In a command economy, the head of each household makes the fundamental economic choices such as what to produce and how to produce output.

A required element for specialization to lead to an increase in the satisfaction of society's wants is:

Competition in a market system denotes a condition where:

Being a "jack-of-all-trades" implies reducing the reliance on the division of labor.

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

One major element of the command system is:

Suppose a firm can produce 70 units of a product, Zenia, by combining labor, land, capital, and entrepreneurial ability, as in the four alternative techniques shown in the table below. Assume further that the firm can hire labor at $3 per unit, land at $3 per unit, capital at $6 per unit, and entrepreneurship at $9 per unit. Refer to the above table. Which technique is the most economically efficient way of producing Zenia?

A characteristic of the market system is:

McDonald's introduced the "Big Mac" in 1968 and it turned out to be a hit, but the "Arch Deluxe" introduced in 1996 was not. The success or failure of a product in the market system is determined by:

The production technique that is most efficient is the one that produces a given amount of output:

Which is true of an economy which operates entirely through central planning?

International specialization and trade:

Suppose a firm can produce 70 units of a product, Zenia, by combining labor, land, capital, and entrepreneurial ability, as in the four alternative techniques shown in the table below. Assume further that the firm can hire labor at $3 per unit, land at $3 per unit, capital at $6 per unit, and entrepreneurship at $9 per unit. Refer to the above table, and suppose that the firm uses production technique D. If each of the 70 units of Zenia that are produced sells for $1 apiece, then how much will be the profits of the firm from 70 units?

Which of the following statements about self-interest in a market system is false?

Even if prices are fixed and competition is restricted by the government, the "invisible hand" will still work in the economy and lead to economic efficiency.

An increase in the demand for a product and a reduction in its costs of production would:

In the circular flow model, households act as buyers in the resource markets.

The choice of the most efficient production technique is not affected by how much buyers want to buy the product.

The market economy is regarded as "efficient" in that:

Which of the following is necessary to make a trade in a barter economy?

Which of the following is not one of the five fundamental questions that an economy must deal with?

The development of the digital video and camera which replaced film cameras is an example of:

Why might a company use barter rather than money to make a trade?

In a competitive market economy, firms and resource suppliers seeking to further their own self-interest will end up, as though guided by an "invisible hand," promoting the public interest.