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Chapter 02 - The Market System and the Circular Flow
59. Refer to the above table. Which technique is economically the most efficient way of
producing Zenia?
60. Refer to the above table. If each of the 70 Zenias that are produced sells for $1 each, what
will be the economic profit for the firm?
61. Refer to the above table. If the price of labor declines from $3 to $2 per unit, then what is
the least costly way of producing Zenias?
Chapter 02 - The Market System and the Circular Flow
The following table illustrates alternative production techniques for producing 18 widgets
that can be sold for $1 each for a total revenue of $18.
62. Based on the data shown above, the economically most efficient production technique is:
63. Refer to the above table. Using the technique cited in the previous question will result in
an:
Chapter 02 - The Market System and the Circular Flow
64. Refer to the above table. If the price per unit of labor were to increase from $2 to $3, the
most efficient production technique would then be:
65. Refer to the above table. At the $3 price for labor the most efficient technique will result
in an:
66. Refer to the above table. If the resource prices doubled and the product price doubled
from the original amounts, what would be the least costly production technique?
Chapter 02 - The Market System and the Circular Flow
67. Refer to the above table. If the resource prices doubled and the product price doubled
from the original amounts, what would be the economic profit?
68. "For whom is a given mix of goods and services to be produced? How, in other words, are
the society's outputs to be distributed among its members?" In a market economy, this
problem is resolved primarily in the:
69. Issues of the distribution of goods and services and of incomes in a market system are the
primary topics of which fundamental question?
Chapter 02 - The Market System and the Circular Flow
70. In a market economy, the money incomes of individuals depend primarily upon:
71. The market system communicates changes in market conditions and elicits appropriate
responses from businesses and resource suppliers through changes in prices. This is known as
the:
72. Which fundamental economic question does a market system primarily address by
focusing on technological advance and capital accumulation?
Chapter 02 - The Market System and the Circular Flow
73. The development of the Internet and e-mail to replace regular mail would be an example
of:
74. Which of the following does not illustrate the idea of creative destruction?
75. The idea that the desires of resource suppliers and firms to further their own self-interest
will automatically further the public interest is known as:
Chapter 02 - The Market System and the Circular Flow
76. Which of the following best describes the "invisible hand" concept?
77. The highly influential book written by Adam Smith is titled:
78. The "invisible hand" concept used to describe the guiding function of prices was
developed by:
Chapter 02 - The Market System and the Circular Flow
79. The major virtues of the market system include all of the following, except:
80. The market economy is regarded as "efficient" in that:
81. The basic problem in central planning has to do with:
Chapter 02 - The Market System and the Circular Flow
82. The major "success indicator" for business managers in command economies like the
Soviet Union and China in the past was:
83. A characteristic of centrally planned economies is that:
84. Which is true of an economy which operates entirely through central planning?
Chapter 02 - The Market System and the Circular Flow
85. A major problem with state ownership of resources is that it does not:
86. The centrally planned system used by the former Soviet Union and pre-reform China
lacked:
87. In the circular flow model, households:
Chapter 02 - The Market System and the Circular Flow
88. The circular flow model:
89. The simple circular flow model shows that workers and capital-owners offer their services
to firms through the:
90. In the circular flow model, households earn their incomes in the:
