Chapter 02 PRACTICE TEST

Chapter 02 PRACTICE TEST - CHAPTER 2 Questio n1 1 out of 1...

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CHAPTER 2 Questio n 1 1 out of 1 points The private ownership of property resources and use of markets and prices to direct and coordinate economic activity is characteristic of: Selected Answer: Correct Answer: Feedback : Correct! See p. 29 of the text. Socialism, communism, and command economic structures are characterized by government ownership of resources. Questio n 2 1 out of 1 points Which is one of the main characteristics of the market system? Selected Answer: Correct Answer: Feedback : Correct! In a market economy, property is owned privately, not by the government. Limits on choice, central planning, and a large role for government would be characteristic of command, not market-bas economies. See p. 29-30 in the text. Questio n 3 1 out of 1 points In the market system, freedom of enterprise means that Selected Answer: Correct Answer: Feedback : Correct! Enterprise here refers to the actions of businesses in terms of what they produce and how th produce it. Consumers being free to buy goods is freedom of choice. "Free" here though doesn't litera mean that there is no price charged, however. See p. 30 of the text. Questio n 4 1 out of 1 points The maximization of profit tends to be the driving force in the economic decision making of
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CHAPTER 2 Questio n 4 1 out of 1 points Selected Answer: Correct Answer: Feedback : Correct! The profit motive is what drives entrepreneurs to start and run businesses. See p. 30-31 of th text. Questio n 5 1 out of 1 points How do consumers typically express self-interest? Selected Answer: Correct Answer: Feedback : Correct! Economic profits and losses are the domain of businesses. When I'm acting as a consumer ( the product market), however, I'm buying goods. Seeking jobs with the highest benefits would be wha seller in the resource market would do in terms of their self-interest. See p. 30-31 of the text. Questio n 6 1 out of 1 points Which is a characteristic of competition as economists see it? Selected Answer: Correct Answer: Feedback : Correct! Competition requires a large number of buyers and sellers, and easy entry and exit from industries. As a result, economic power by any one economic agent is limited. See p. 31 of the text. Questio n 7 1 out of 1 points To decide how to use its scarce resources to satisfy economic wants, a market economy primarily relies on Selected Answer: Correct Answer:
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CHAPTER 2 Questio n 7 1 out of 1 points Feedback : Correct! Monopoly power could result in the inefficient use of scarce resources, while planning and production targets are characteristic of command, not market, economies. Prices are the primary meth used in market economies to direct where resources are used. See p. 31 of the text. Questio n 8 1 out of 1 points The market system is a method of Selected Answer: Correct Answer: Feedback : Correct! Market systems organize and coordinate information by helping buyers and sellers get togeth Central planning is not used in a market system, but specialization and division of labor are because t help to produce goods at the lowest possible cost. See p. 31 of the text.
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