Economics Quiz 2

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Which of the following is a distinguishing feature of a command system?

Central Planing

Which of the following is a distinguishing feature of laissez-faire capitalism?

Minimal government intervention

Example of command economies

Cuba and North Korea

Economic system differ according to which two main characteristics

Who owns the factors of production and the methods used to coordinate economic activity

Which of the following is not a typical characteristic of market system?

A. Private property B. Freedom of enterprise C. Government ownership of most property resources D. Competition in product and resources market Answer is C

Freedom of enterprises

Allows businesses, within broad limits, to choose what goods to produce

The use of money contributes to economic efficiency because

It promotes specialization by overcoming the problems with barter

The competitive market system

Encourages innovation because successful innovators are rewarded with economic profits

The market system’s answer to the fundamental question "Who will get the goods and services?" Is essentially

"Those most willing and able to pay for them."

The market system’s answer to the fundamental question " What will be produced?" Is essentially

"Goods and services that are profitable."

Which of the following guides sensible decisions regarding the management of business risk in market system?

The profit and loss system

According to the circular flow model, product markets are where

Business earn their revenues from households

In the circular flow model of the market system, households’ major role is to

Buy products and sell resources

In a market system, resources will move away from an industry when

Demand for the industry’s product is decreasing

All of the following statements describes a market economy except

A. Government prescribes the market prices for goods and services.
B. Prices provide important signals to buyers and sellers
C. The allocation of resources is determined by their prices
D. The actions of buyers and sellers establish a products price

Answer A

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