Pre exam 2 - Pre-Test Chapter 2 ed17 1. "Under central...

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Pre-Test Chapter 2 ed17 1. "Under central planning, some group has to decide how to get the necessary inputs produced in the right amounts and delivered to the right places at the right time. This is a nearly impossible task without markets and profits." This quotation best identifies the: A. incentive problem under central planning. B. coordination problem under central planning. C. self-sufficiency dilemma under communism. D. resource overcommitment problem under communism. 2. 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. 3. The failure of Soviet central planning was reflected in: A. a declining growth rate. B. poor quality goods. C. the failure to provide promised consumer goods. D. all of the above. 4. Refer to the above diagram. Arrows (1) and (2) represent: A. goods and resources respectively. B. money incomes and output respectively. C. output and money incomes respectively. D. resources and goods respectively. 5. If a competitive industry is neither expanding nor contracting, we would expect: A. total revenue to be zero. B. economic profits to be zero. C. total opportunity cost to be zero. D. more resources to flow to that industry. 6. Suppose that an individual sees a tremendous opportunity to produce and sell a new product, but dismisses the idea because there is no way to exploit this opportunity for personal gain. This situation best identifies the: A. coordination problem under communist central planning. B. self-sufficiency dilemma under communism. C. asymmetric information problem under communism. D. incentive problem under communist central planning. Answer the next question(s) on the basis of the following information: Suppose 30 units of product A can be produced by employing just labor and capital in the four ways shown below. Assume the prices of labor and capital are $2 and $3 respectively. Production Techniques:
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Pre exam 2 - Pre-Test Chapter 2 ed17 1. "Under central...

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