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| 1 | |
Self interest is |
| | A) | one reason market economies don't work very well. |
| | B) | discouraged in market economies. |
| | C) | irrelevant to market economies. |
| | D) | is an important and useful part of market economies. |
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| 2 | |
In theory, socialism is an economic system that relies on |
| | A) | people's self interest and society's determination of the answers to the three economic questions. |
| | B) | people's good will towards others and society's determination of the answers to the three economic questions. |
| | C) | people's self interest and the private ownership of the means of production by a small group of people. |
| | D) | people's good will towards others and private ownership of the means of production are by a small group of people. |
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| 3 | |
In the factor market, |
| | A) | businesses both supply and demand factors of production. |
| | B) | households supply factors of production which are demanded by businesses. |
| | C) | businesses supply factors of production which are demanded by households. |
| | D) | businesses supply goods and services which are demanded by households. |
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| 4 | |
In market-oriented economies like the United States, the actual decisions of what to produce, how to make it, and for whom to produce it, are predominately made by |
| | A) | the government. |
| | B) | households. |
| | C) | businesses. |
| | D) | tradition. |
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| 5 | |
The principle of consumer sovereignty |
| | A) | is violated if businesses decide what to produce. |
| | B) | says that the government should protect consumers from businesses. |
| | C) | says that, ultimately, consumers' preferences shape what is produced. |
| | D) | was a key characteristic of feudalism. |
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| 6 | |
Of the three types of businesses, the one that can attract financing most easily is |
| | A) | sole proprietorships |
| | B) | partnerships |
| | C) | corporations |
| | D) | all of the above are equally effective if attracting financing. |
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| 7 | |
Government is an important part of the US economy because it |
| | A) | makes up two thirds of the economy. |
| | B) | is responsible for answering the three economic questions. |
| | C) | controls the factors of production. |
| | D) | sets the rules of interaction between households and businesses and it acts as a referee to enforce these rules. |
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| 8 | |
Which of the following is a reason real-world international trade can be difficult? |
| | A) | most modern countries can produce everything themselves. |
| | B) | many countries, especially poor ones, don't have a comparative advantage in anything. |
| | C) | international trade requires complex rules and laws which are usually enforced by the government. However, there is no central world government and many countries lack effective national governments. |
| | D) | One country's gains from trade comes at another's expense so they won't want to trade. |
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| 9 | |
The reasons economists give for government intervention in the market can be summed up by the phrase |
| | A) | Invisible Hand |
| | B) | market failures |
| | C) | laissez faire |
| | D) | government failures |
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| 10 | |
It is difficult for the market to provide appropriate levels of a public good because |
| | A) | the good is already being provided by the government. |
| | B) | firms know they can set a very high price for public goods. |
| | C) | markets are good for profits but not for efficiency. |
| | D) | free riders may refuse to pay for a good in the hope that others will. |
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