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/ Topic2:TheMarketSystemandtheCircularFlow(https://moodle.straighterline.com/course/view.php?
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Timetaken
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Question
Correct
1.50pointsout
Thursday,July28,2016,1:05PM
Finished
Thursday,July28,2016,1:29PM
23mins53secs
25.50outof30.00(85%)
Inacompetitivemarketeconomyfirmswillselecttheleastcostproductiontechnique
because:
Selectone:
a.suchchoiceswillresultinthefullemploymentofavailableresources.
of1.50
b.todosowillmaximizethefirms'profits.
c.thiswillpreventnewfirmsfromenteringtheindustry.
d."dollarvoting"byconsumersmandatessuchachoice.
Thecorrectansweris:todosowillmaximizethefirms'profits.
Question
Correct
Whichofthefollowingisadistinguishingfeatureofamarketsystem?
Selectone:
a.publicownershipofallcapital.
1.50pointsout
of1.50
b.centralplanning.
c.widespreadprivateownershipofcapital.
d.acircularflowofgoods,resources,andmoney.
Thecorrectansweris:widespreadprivateownershipofcapital.
Question
Correct
Innovationlaggedinthecentrallyplannedeconomiesbecause:
Selectone:
a.therewastoomuchdomesticbusinesscompetition.
1.50pointsout
of1.50
b.therewastoomuchcompetitionfromforeignfirms.
c.enterprisesresistedinnovationinfearthattheirproductiontargets
wouldberaised.
d.exportshadtoequalimportsfortheplantowork.
Thecorrectansweris:enterprisesresistedinnovationinfearthattheirproduction
targetswouldberaised.
Question
Correct
Fromsociety'spointofviewtheeconomicfunctionofprofitsandlossesisto:
Selectone:
a.promotetheequaldistributionofrealassetsandwealth.
1.50pointsout
of1.50
b.achievefullemploymentandpricelevelstability.
c.contributetoamoreequaldistributionofincome.
d.reallocateresourcesfromlessdesiredtomoredesireduses.
Thecorrectansweris:reallocateresourcesfromlessdesiredtomoredesireduses.
Question
Correct
1.50pointsout
(ConsiderThis)In1975McDonald'sintroduceditsEggMcMuffinbreakfastsandwich,
whichremainspopularandprofitabletoday.Thislongevityillustratestheideaof:
Selectone:
a.opportunitycost.
of1.50
b.upslopingsupply.
c.consumersovereignty.
d.specialization.
Thecorrectansweris:consumersovereignty.
Question
Correct
1.50pointsout
Thedollarvotesofconsumersultimatelydeterminethecompositionofoutputand
theallocationofresourcesinamarketeconomy.Thisstatementbestdescribesthe
conceptof:
Selectone:
of1.50
a.deriveddemand.
b.consumersovereignty.
c.theinvisiblehand.
d.marketfailure.
Thecorrectansweris:consumersovereignty.
Question
Correct
1.50pointsout
of1.50
Refertotheabovediagram.Flow(4)represents:
Selectone:
a.wage,rent,interest,andprofitincome.
b.land,labor,capital,andentrepreneurialability.
c.goodsandservices.
d.consumerexpenditures.
Thecorrectansweris:consumerexpenditures.
Question
Incorrect
ThefailureofSovietcentralplanningwasreflectedin:
Selectone:
a.adeclininggrowthrate.
0.00pointsout
b.poorqualitygoods.
of1.50
c.thefailuretoprovidepromisedconsumergoods.
d.allofthese.
Thecorrectansweris:allofthese.
Question
Correct
Answerthenextquestion(s)onthebasisofthefollowinginformation:Suppose30
unitsofproductAcanbeproducedbyemployingjustlaborandcapitalinthefour
waysshownbelow.Assumethepricesoflaborandcapitalare$2and$3
respectively.
1.50pointsout
of1.50
Refertotheaboveinformation.Whichtechniqueiseconomicallymostefficientin
producingA?
Selectone:
a.I
b.II
c.III
d.IV
Thecorrectansweris:IV
Question
10
Incorrect
Aneconomicsystem:
Selectone:
a.requiresagroupingofprivatemarketslinkedtooneanother.
0.00pointsout
of1.50
b.isaparticularsetofinstitutionalarrangementsandacoordinating
mechanismusedtorespondtotheeconomizingproblem.
c.requiressomesortofcentralizedauthority(suchasgovernment)to
coordinateeconomicactivity.
d.isaplanorschemethatallowsafirmtomakemoneyatsomeother
firm'sexpense.
Thecorrectansweris:isaparticularsetofinstitutionalarrangementsanda
coordinatingmechanismusedtorespondtotheeconomizingproblem.
Question
11
Correct
Theeconomicfunctionofprofitsandlossesisto:
Selectone:
a.bringaboutamoreequaldistributionofincome.
1.50pointsout
of1.50
b.signalthatresourcesshouldbereallocated.
c.eliminatesmallfirmsandreducecompetition.
d.tellgovernmentwhichindustriesneedtobesubsidized.
Thecorrectansweris:signalthatresourcesshouldbereallocated.
Question
12
Incorrect
0.00pointsout
of1.50
Supposethatanindividualseesatremendousopportunitytoproduceandsellanew
product,butdismissestheideabecausethereisnowaytoexploitthisopportunityfor
personalgain.Thissituationbestidentifiesthe:
Selectone:
a.coordinationproblemundercommunistcentralplanning.
b.selfsufficiencydilemmaundercommunism.
c.asymmetricinformationproblemundercommunism.
d.incentiveproblemundercommunistcentralplanning.
Thecorrectansweris:incentiveproblemundercommunistcentralplanning.
Question
13
Correct
Whichofthefollowingisadistinguishingfeatureofacommandsystem?
Selectone:
a.privateownershipofallcapital.
1.50pointsout
of1.50
b.centralplanning.
c.heavyrelianceonmarkets.
d.widespreaddispersionofeconomicpower.
Thecorrectansweris:centralplanning.
Question
14
Correct
Barter:
Selectone:
a.isthemajormeansofexchangeincentrallyplannedeconomies.
1.50pointsout
of1.50
b.accountsforover30percentofthedollarvolumeofallexchangeinthe
U.S.economy.
c.entailstheexchangeofgoodsforgoods.
d.isusedtocircumventtheproblemofalackofcoincidenceofwants
amongpotentialbuyersandsellers.
Thecorrectansweris:entailstheexchangeofgoodsforgoods.
Question
15
Correct
Whichofthefollowingisalimitationofthesimplecircularflowmodel?
Selectone:
a.productmarketsareignored.
1.50pointsout
of1.50
b.resourcemarketsareignored.
c.thedeterminationofproductandresourcepricesisnotexplained.
d.householdsareincluded,butnotbusinesses.
Thecorrectansweris:thedeterminationofproductandresourcepricesisnot
explained.
Question
16
Correct
Theinvisiblehandconceptsuggeststhat:
Selectone:
a.changesinproductdemandsareonlyrandomlyreflectedinchangesin
1.50pointsout
thedemandsforresources.
of1.50
b.profitmaximizationisinconsistentwithanefficientallocationof
resources.
c.governmentactionisnecessarytocorrectformarketfailures.
d.whenfirmsmaximizetheirprofits,society'soutputwillalsobe
maximized.
Thecorrectansweris:whenfirmsmaximizetheirprofits,society'soutputwillalsobe
maximized.
Question
17
Correct
TheFrenchterm"laissezfaire"means:
Selectone:
a."thereisnofreelunch."
1.50pointsout
of1.50
b."letitbe."
c."circularflow."
d."publicownership."
Thecorrectansweris:"letitbe."
Question
18
Correct
1.50pointsout
of1.50
Refertotheabovediagram.Flow(3)represents:
Selectone:
a.wage,rent,interest,andprofitincome.
b.land,labor,capital,andentrepreneurialability.
c.goodsandservices.
d.consumerexpenditures.
Thecorrectansweris:goodsandservices.
Question
19
Correct
1.50pointsout
EnterprisemanagersandworkersintheSovietUnionoftenresistedinnovationsin
productionmethodsbecause:
Selectone:
a.productiontargetswereoftenincreasedwheninnovationoccurred.
of1.50
b.therewasachronicshortageofcomputers.
c.workerscouldnotbereallocatedgeographically.
d.innovationsordinarilyincreaseddependenceonworldmarkets.
Thecorrectansweris:productiontargetswereoftenincreasedwheninnovation
occurred.
Question
20
Correct
Thepursuitofselfinterest:
Selectone:
a.ishighlydetrimentaltothemarketsystem.
1.50pointsout
of1.50
b.meansthesameas"selfishness."
c.isreflectedinthebehavioroffirms,butnotinthebehaviorof
consumers.
d.givesdirectiontothemarketsystem.
Thecorrectansweris:givesdirectiontothemarketsystem.