Pre-Test Chap 02 e18 - Pre-Test Chap 02 e18 Student: _ 1....

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Pre-Test Chap 02 e18 Student: ___________________________________________________________________________ 1. The regulatory mechanism of the market system is: A. self-interest. B. private property. C. competition. D. specialization. 2. The market system's answer to the fundamental question "How will the system accommodate change?" is essentially: A. "Through government leadership and direction." B. "Through the guiding function of prices and the incentive function of profits." C. "Through training and retraining programs." D. "Through random trial and error." 3. The invisible-hand concept suggests that: A. market failures imply the need for a national economic plan. B. big businesses are inherently more efficient than small businesses. C. the competitiveness of a capitalistic market economy invariably diminishes over time. D. assuming competition, private and public interests will coincide. 4. The economic function of profits and losses is to: A. bring about a more equal distribution of income. B. signal that resources should be reallocated. C. eliminate small firms and reduce competition. D. tell government which industries need to be subsidized. 5. In a competitive market economy firms will select the least-cost production technique because: A. such choices will result in the full employment of available resources. B. to do so will maximize the firms' profits. C. this will prevent new firms from entering the industry. D. "dollar voting" by consumers mandates such a choice.
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6. The fact that the major indicator of enterprise success in the Soviet Union and pre-reform China was the quantity of output implied that: A. product quality was neglected. B. production costs were minimized. C. product-mix met consumer needs. D. technological advance was too rapid. 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.
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Pre-Test Chap 02 e18 - Pre-Test Chap 02 e18 Student: _ 1....

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