CH4 - CHAPTER 4 The Market System Topic 1. Characteristics...

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CHAPTER 4 The Market System Topic Question numbers ___________________________________________________________________________________________________ 1. Characteristics of the market system; capital accumulation 1-14 2. Specialization 15-18 3. Exchange; use of money 19-24 4. Market system; profits and costs 25-49 5. Least-cost combination of resources 50-57 6. Consumer sovereignty; invisible hand 58-72 Last Word 73-74 True-False 75-85 ___________________________________________________________________________________________________ Multiple Choice Questions Characteristics of the market system; capital accumulation 1. Which of the following is not a characteristic of the market system? A) private property B) freedom of enterprise C) government ownership of the major industries D) competition in product and resource markets 2. Which of the following is a fundamental characteristic of the market system? A) property rights B) central planning by government C) altruistic behavior D) government-set wages and prices 3. Copyrights and trademarks are examples of: A) capital goods. B) human capital. C) property rights. D) public goods. 4. The pursuit of self-interest: A) is highly detrimental to the market system. Page 1
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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. 5. The regulatory mechanism of the market system is: A) self-interest. B) private property. C) competition. D) specialization. 6. Broadly defined, competition involves: A) private property and freedom of expression. B) independently acting buyers and sellers and freedom to enter or leave markets. C) increasing opportunity costs and diminishing marginal utility. D) capital goods and division of labor. 7. Competition means that: A) sellers can manipulate market price by causing product scarcities. B) there are independently-acting buyers and sellers in each market. C) a product can be purchased at a number of different prices. D) there is more than one seller in a market. 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. To increase the amount of capital goods in a full employment-full production economy, society must: A) decrease consumption. B) increase consumption. C) inflate the general price level. D) deflate the general price level. 10. "Roundabout production" ordinarily leads to: A) the use of fewer capital goods. B) smaller markets. C) greater production. D) simultaneous increases in consumer goods production. 11. Which of the following is an example of a capital good. A)
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CH4 - CHAPTER 4 The Market System Topic 1. Characteristics...

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