Problem Set 1 - Ch 2

Problem Set 1 - Ch 2 - ProblemSet1Chapter2 Student:_

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Problem Set 1 – Chapter 2 Student: ___________________________________________________________________________ 1. Which of the following is a distinguishing feature of a command system? A. private ownership of all capital. B. central planning. C. heavy reliance on markets. D. wide-spread dispersion of economic power. 2. Which of the following is a distinguishing feature of a market system? A. public ownership of all capital. B. central planning. C. wide-spread private ownership of capital. D. a circular flow of goods, resources, and money. 3. The term laissez faire suggests that: A. land and other natural resources should be privately owned, but capital should be publicly owned. B. land and other natural resources should be publicly owned, but capital equipment should be privately owned. C. government should not interfere with the operation of the economy. D. government action is necessary if the economy is to achieve full employment and full production. 4. Economic scarcity: A. is peculiar to the United States economy. B. applies to all economies. C. is peculiar to command systems. D. is peculiar to market systems. 5. Economic systems differ according to what two main characteristics? A. Who owns the factors of production, and the methods used to coordinate economic activity. B. The technology used in production, and the quantity and quality of natural resources. C. How goods are produced, and who gets them. D. The political system in place, and the degree of scarcity facing the economy.
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6. Copyrights and trademarks are examples of: A. capital goods. B. human capital. C. property rights. D. public goods. 7. The pursuit of self-interest: A. is highly detrimental to the market system. B. means the same as "selfishness." C. is reflected in the behavior of firms, but not in the behavior of consumers. D. gives direction to the market system. 8. Well-defined property rights: A. discourage investment and growth. B. discourage hard work. C. impede exchange. D. encourage owners to maintain or improve their property. 9. Specialization in production is important primarily because it: A. results in greater total output. B. allows society to avoid the coincidence-of-wants problem. C. allows society to trade by barter. D. allows society to have fewer capital goods. 10. The coincidence-of-wants problem associated with barter refers to the fact that: A. for exchange to occur each seller must have a product that some buyer wants. B. money must be used as a medium of exchange or trade will never occur. C. specialization is restricted by the size or scope of a market. D. buyers in resource markets and sellers in product markets can never engage in exchange. 11. The use of money contributes to economic efficiency because: A. governmental direction of the production and distribution of output can be avoided by using money. B. roundabout production could not occur without the availability of money.
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Problem Set 1 - Ch 2 - ProblemSet1Chapter2 Student:_

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