978-1259723223 Test Bank TBChap002 Part 2

subject Type Homework Help
subject Pages 14
subject Words 5573
subject Authors Campbell McConnell, Sean Flynn, Stanley Brue

Unlock document.

This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
page-pf1
B.
realize an economic profit of $4.
49. Answer the question using the following data, which show all available techniques for
producing 20 units of a particular commodity
Resource
Resource prices
Possible production
Techniques
#1
#2
#3
#4
#5
Land
$4
2
4
2
4
4
Labor
3
1
2
4
1
3
Capital
3
5
2
3
1
2
Entrepreneurial Ability
2
3
1
1
4
1
If a new production technique is developed that enables a firm to produce 20 units of
output with 3 units of land, 3 of labor, 1 of capital, and 2 of entrepreneurial ability, this
technique would
A. not be adopted because, although it reduces production costs, it does not increase
profit.
page-pf2
2-22
50. Answer the question 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:
II
III
IV
Labor
3
2
5
Capital
3
5
1
Which technique is economically most efficient in producing A?
A.
I
51.
Answer the question 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:
II
III
IV
Labor
3
2
5
Capital
3
5
1
If the price of product A is $0.50, the firm will realize
page-pf3
2-23
A. an economic profit of $4.
52.
In a competitive market economy, firms select the least-cost production technique
because
A.
such choices will result in full employment of available resources.
53.
The market system's answer to the fundamental question "What will be produced?" is
essentially
D.
"Goods and services that possess lasting value."
page-pf4
54.
The market system's answer to the fundamental question "How will the goods and
services be produced?" is essentially
A.
"With as much machinery as possible."
B.
"Using the latest technology."
55.
The market system's answer to the fundamental question "Who will get the goods
and services?" is essentially
A.
"Those most willing and able to pay for them."
B.
"Those who physically produced them."
C.
"Those who most need them."
D.
"Those who get utility from them."
page-pf5
56.
The market system's answer to the fundamental question "How will the system
accommodate change?" is essentially
D.
"Through trial and error."
57.
The market system's answer to the fundamental question "How will the system
promote progress?" is essentially
58.
The advent of Netflix movie streaming and Redbox kiosks renting DVD and Blu-ray
movies have virtually demolished the market for video rentals from brick and mortar
stores such as Blockbuster. This is an example of
page-pf6
B.
derived demand.
C.
capital accumulation.
59.
"Consumer sovereignty" refers to the
A.
fact that resource prices are higher than product prices in capitalistic economies.
60.
The dollar votes of consumers ultimately determine the composition of output and
the allocation of resources in a market economy. This statement best describes the
concept of
A.
derived demand.
page-pf7
2-27
61.
Which of the following is not one of the five fundamental questions?
D.
How will the system promote progress?
62.
"Consumer sovereignty" means that
A.
buyers can dictate the prices at which goods and services will be offered.
B.
advertising is ineffective because consumers already know what they want.
63.
Which of the following best describes the invisible-hand concept?
page-pf8
2-28
D.
Central direction by the government will improve resource allocation in a
capitalistic economy.
64.
The invisible hand refers to the
A.
fact that the U.S. tax system redistributes income from rich to poor.
65.
The invisible hand concept suggests that
A.
market failures imply the need for a national economic plan.
page-pf9
66.
Two major virtues of the market system are that it
D.
eliminates discrimination and minimizes environmental pollution.
67.
The market system
A.
produces considerable inefficiency in the use of scarce resources.
page-pfa
2-30
68.
According to the concept of the "invisible hand," if Susie opens and operates a
profitable childcare center, then
A.
government should regulate the business to ensure quality.
69.
The invisible hand promotes society's interests because
C.
it makes sure that everyone wins from competition in the market.
D.
government regulation pushes business into producing the right mix of goods and
services.
70.
The coordination problem in the centrally planned economies refers to the idea that
page-pfb
2-31
D.
exports had to be equal to imports for a central plan to work.
71.
"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
D.
resource overcommitment problem under communism.
72.
"Because the outputs of many industries are the inputs to other industries, the failure
of any single industry to fulfil the output quantities specified in the central plan caused a
chain reaction of adverse repercussions on production." This quotation best identifies
the
page-pfc
2-32
A.
incentive problem under central planning.
73.
The incentive problem under communist central planning refers to the idea that
D.
exports had to be equal to imports for a central plan to work.
74.
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.
page-pfd
2-33
75.
Innovation lagged in the centrally planned economies because
A.
there was too much domestic business competition.
B.
there was too much competition from foreign firms.
76.
The fact that the major indicator of enterprise success in the Soviet Union and pre-
reform China was the quantity of output implied that
D.
technological advance was too rapid.
page-pfe
77.
Enterprise managers and workers in the Soviet Union often resisted innovations in
production methods because
A.
production targets were often increased when innovation occurred.
B.
there was a chronic shortage of computers.
C.
workers could not be reallocated geographically.
D.
innovations ordinarily increased dependence on world markets.
78.
If products were in short or surplus supply in the Soviet Union,
A.
price and profit signals eliminated those shortages and surpluses.
page-pff
2-35
79.
In what type of business do the owners bear no personal financial responsibility for
the company's debts and obligations?
A.
partnerships
80.
The simple circular flow model shows that
A.
households are on the buying side of both product and resource markets.
B.
businesses are on the selling side of both product and resource markets.
81.
The two basic markets shown by the simple circular flow model are
page-pf10
A.
capital goods and consumer goods.
82.
In the resource market,
A.
businesses borrow financial capital from households.
83.
In the simple circular flow model,
A.
households are buyers of resources.
page-pf11
2-37
84.
Refer to the diagram. Flow 1 represents
D.
consumer expenditures.
85.
Refer to the diagram. Flow 2 represents
page-pf12
D.
consumer expenditures.
86.
Refer to the diagram. Flow 3 represents
A.
wage, rent, interest, and profit income.
page-pf13
2-39
87.
Refer to the diagram. Flow 4 represents
A.
wage, rent, interest, and profit income.
88.
In terms of the circular flow diagram, households make expenditures in the market
and receive income through the market.
A.
product; financial
89.
In terms of the circular flow diagram, businesses obtain revenue through the market
and make expenditures in the market.
page-pf14
2-40
A.
product; financial
90.
Households and businesses are
91.
Refer to the diagram. Arrows (1) and (2) represent

Trusted by Thousands of
Students

Here are what students say about us.

Copyright ©2022 All rights reserved. | CoursePaper is not sponsored or endorsed by any college or university.