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| 1 | |
The private ownership of property, and the use of prices to direct and coordinate economic activity, are characteristics of |
| | A) | A market system |
| | B) | A command system |
| | C) | A factor market |
| | D) | A product market |
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| 2 | |
In the circular flow model, businesses |
| | A) | demand both products and resources |
| | B) | supply both products and resources |
| | C) | demand products and supply resources |
| | D) | supply products and demand resources |
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| 3 | |
The economist who first used the phrase "invisible hand" was |
| | A) | Milton Friedman |
| | B) | Karl Marx |
| | C) | Adam Smith |
| | D) | David Ricardo |
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| 4 | |
Which of the following provides a positive externality? |
| | A) | a chocolate bar |
| | B) | the public education system |
| | C) | a single-family dwelling |
| | D) | a forklift |
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| 5 | |
If you agree to buy me dinner in exchange for taking care of your dog over the weekend, this is an example of |
| | A) | barter |
| | B) | a monetary exchange |
| | C) | the division of labour |
| | D) | specialization |
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| 6 | |
In a market system, which goods and services are produced is determined by |
| | A) | consumer demand |
| | B) | how profitable they are to produce |
| | C) | the self interest of both producers and consumers |
| | D) | all of the above |
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| 7 | |
A traffic sign would be classified as a |
| | A) | private good |
| | B) | public good |
| | C) | subsidy |
| | D) | negative externality |
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| 8 | |
Market failure occurs when |
| | A) | a competitive market system fails to allocate resources in a way that best satisfies the wants of society |
| | B) | a producer fails to deliver a product or service on time |
| | C) | a consumer fails to make payments according to the purchase agreement |
| | D) | a company declares bankruptcy |
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| 9 | |
If I can get the benefits of publicly provided national defence without paying for it, I would be, according to an economist |
| | A) | a thief |
| | B) | a monopolist |
| | C) | a free rider |
| | D) | a capitalist |
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| 10 | |
When the Royal Bank hires fifteen new employees, they participate in |
| | A) | consumption expenditures |
| | B) | the product market |
| | C) | the factor market |
| | D) | the retail market |
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| 11 | |
In order to function as money, an item must |
| | A) | be approved by the federal government |
| | B) | be generally accepted by sellers |
| | C) | earn interest |
| | D) | require a coincidence of wants |
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| 12 | |
In a market system, who gets how much of the economy's output is decided by |
| | A) | the government |
| | B) | each person's ability and willingness to pay |
| | C) | consumer preferences |
| | D) | each person's level of disposable income |
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| 13 | |
The invention of the iPod and other MP3 players significantly decreased the demand for CDs. An economic term describing this is |
| | A) | free riding |
| | B) | laissez faire |
| | C) | negative externality |
| | D) | creative destruction |
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| 14 | |
One of the main benefits of specialization is |
| | A) | increased competition |
| | B) | increased self-sufficiency |
| | C) | greater efficiency, resulting in increased total output |
| | D) | lower unemployment |
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| 15 | |
The term "dollar votes" means |
| | A) | consumer demands in dollars for various products will determine whether or not these products get produced in a market economy. |
| | B) | consumers vote for their favourite products over the internet. |
| | C) | firms decide how much of a good to produce based on consumer surveys of the good. |
| | D) | the amount of money politicians vote to spend on public goods. |
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