Chapter2 - econ

Chapter2 - ECON
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Unformatted text preview: Sheet1 Page 1 If goods and services flow clockwise in a circular economic flow diagram, then consumption expenditures flow: Counterclockwise and revenues flow counterclockwise Which statement best describes a capitalist economy? Society determines production and the allocation of goods and services only through markets A major problem with state ownership of resources is that it does not: Give incentives for individuals to make the best use of those resources In the circular economic flow diagram, households: Make consumption expenditures and receive goods and services A prerequisite of specialization is: a medium of exchange The construction and use of capital goods to aid in the production of consumer goods is: roundabout production In 1999, McDonald's introduced the "Big Xtra" and it turned out to be successful product. In the marketplace for fast-food prod Consumer sovereignty By free enterprise, we mean that: Individuals may obtain resources, organize production, and sell the resulting output in any legal way they choose In the circular flow model, households: Buy products and sell resources Competition denotes a condition where: There are many independent buyers and sellers in a market All accurately describe a market economy except: Government establishes maximum and minimum prices for most goods and services In product markets: Businesses sell goods and services to households...
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