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goods If and services flow clockwise in a circular economic flow diagram, then consumption expenditures flow: Counterclockwise and revenues flow counterclockwise Which statement best describes a capitalist economy? Society determines production and the allocation of goods and services only through markets A major problem with state ownership of resources is that it does not: Give incentives for individuals to make the best use of those resources In the circular economic flow diagram, households: Make consumption expenditures and receive goods and services A prerequisite of specialization is: a medium of exchange The construction and use of capital goods to aid in the production of consumer goods is: roundabout production In 1999, McDonald's introduced the "Big Xtra" and it turned out to be successful product. In the marketplace for fast-food products, this success would be an example of: Consumer sovereignty By free enterprise, we mean that: Individuals may obtain resources, organize production, and sell the resulting output in any legal way they choose In the circular flow model, households: Buy products and sell resources Competition denotes a condition where: There are many independent buyers and sellers in a market All accurately describe a market economy except: Government establishes maximum and minimum prices for most goods and services In product markets: Businesses sell goods and services to households Which is assumed to be most limited in scope under a market system? Government Which statement is correct? In a market system, prices serve to ration goods and services to consumers How do workers typically express self-interest? By seeking jobs with the best combination of wages and benefits Consider a barter situation where you have pens and you want pencils. To achieve your objective there must be a(n): Coincidence of wants Which is characteristic of the markest system? Free enterprise and checks In a market system, well-defined property rights are important because they: Encourage economic activity Which statement best describes a command economy? The production and allocation of goods and services is determined primarily through government All economic systems must answer certain fundamental economic questions. Which is not one of these questions? Which actions should government take to reduce inflation? In the simple circular flow model: Households are sellers of resources and demanders of products The "invisible hand" concept used to describe the guiding function of prices was developed by: Adam Smith Assume that rents flow clockwise in a circular economic flow diagram. This implies that land flows: Counterclockwise and profits flow clockwise In a circular flow model consisting of the household sector, the business sector, product markets, and resource markets: Businesses are sellers products The of basic economic argument for the market system is that it promotes: An efficient allocation of resources In the system of central planning: The outputs of some industries become inputs for other industries In a market economy, entrepreneurs are most concerned with: Maximizing profits or minimizing losses Another description for capitalism is: The market system Competition is more likely to exist when: There is free entry into and exit out of industries A characteristic of centrally planned economies is that: The price is relatively unimportant in allocating resources A basic characteristic of a command system is that: Government owns most economic resources Issues of the distribution of goods and services and incomes in a competitive market system are the primary topic of which fundamental question? Who is to receive the output? In a capitalistic economy: There is a reliance on the market system A characteristic of the market system is: Extensive use of capital goods How does human specialization contribute to an economy's output? It makes use of difference in abilities The centrally planned system used by the former Soviet Union and pre-reform China lacked: Entrepreneurship Which statement is correct? Freedom of choice and enterprise are essential elements of the market system A major m of a market system is that: There is consumer sovereignty Which is an example of barter? A person trades a desk for a box of tools Which is a key feature of the market system? The right to own private property and control resource use An economic system in which money is not used is a: Barter economy The process in which workers select specialized tasks to make a product is referred to as: Division of labor Consumer sovereignty and "dollar votes" are most related to which fundamental question about a competitive market system? What will be produced? The basic problem in central planning has to do with: Coordinating production so that bottlenecks do not develop Economic efficiency would be primarily discussed in response to which of the fundamental questions about a competitive market economy? How is the output to be produced? Which statement best describes a capitalist economy? The production and allocation of goods and services is determined primarily through markets Capitalism is an economic system that: Gives private individuals and corporations the right to own productive resources In a market economy, the money incomes of individuals depend primarily upon: The value and amounts of the productive resources the individuals possess The circular flow model shows that the goods and services produced by business firms are sold through: Product markets The simple circular flow model shows that workers, entrepreneurs, and the owners of land and capital offer their services through: Resource markets ... View Full Document

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