Chapter 2—The Power of Markets and the Wealth of Nations Key
1. Property rights need to be secure
2. Property rights
3. Trade is promoted by
4. Prior to 1840, most businesses were
5. Trade between countries is based on
6. With economies of scale came
7. Data suggest that which of the following are necessary for high rates of economic growth?
8. In international trade the concept of ‘relative opportunity cost’ refers to
9. The fundamental economic problem faced by individuals is
10. Allocation schemes can be based on
11. What incentive is created by a first-come first-serve allocation scheme?
12. Economists argue that which allocation scheme leads to the most efficiency?
13. The cost of a choice is
14. All the costs of a transaction are referred to as
15. Without contracts, what type of transactions would occur?
16. People trade because
17. Buying a product in one market and selling it in another is called
18. What motivates the actions of entrepreneurs in markets?
20. Economic freedom and economic prosperity are
21. In Argentina, agricultural production is directly related to
22. Agriculture in Argentina became more efficient when ____ were introduced.
23. The ownership of property is not related to economic development.
24. Clearly defined property rights promote the efficient use of property.
25. Trade between countries is only based on absolute advantage.
26. Comparative advantage and relative opportunity costs are the same thing.
27. First-come, first-serve allocation schemes promote efficiency.
28. Opportunity cost is defined monetary terms.
29. It is impossible to create a free market system that promotes economic efficiency.
30. Arbitrage creates profits but has no effect on prices.
31. Creative destruction is one of the negative effects of market competition.
32. Monopoly is represented by a single seller.