Ch.4 Quiz

Instructions
Please read the questions carefully.

This assessment is worth 100 points.

  1. Which of the following is not a characteristic of the market system?   (4 points)

    a.  
    b.  
    c.  
    d.  

  2. Which of the following is a fundamental characteristic of the market system?   (4 points)

    a.  
    b.  
    c.  
    d.  

  3. Broadly defined, competition involves:   (4 points)

    a.  
    b.  
    c.  
    d.  

  4. To increase the amount of capital goods in a full employment-full production economy, society must:   (4 points)

    a.  
    b.  
    c.  
    d.  

  5. If an economy is operating on its production possibilities curve, an increase in the production of capital goods:   (4 points)

    a.  
    b.  
    c.  
    d.  



  6. On the basis of the above information and assuming trade occurs between the three states we can expect:   (4 points)

    a.  
    b.  
    c.  
    d.  

  7. The use of money contributes to economic efficiency because:   (4 points)

    a.  
    b.  
    c.  
    d.  

  8. Which of the following is one of the Four Fundamental Questions?   (4 points)

    a.  
    b.  
    c.  
    d.  

  9. Economic profit is:   (4 points)

    a.  
    b.  
    c.  
    d.  

  10. A firm's economic profit is:   (4 points)

    a.  
    b.  
    c.  
    d.  

  11. If competitive industry Z is making substantial economic profit, output will:   (4 points)

    a.  
    b.  
    c.  
    d.  

  12. In a market economy a significant change in the demand for product X will:   (4 points)

    a.  
    b.  
    c.  
    d.  

  13. Economic profits and losses:   (4 points)

    a.  
    b.  
    c.  
    d.  

  14. If competitive industry Y is incurring substantial losses, output will:   (4 points)

    a.  
    b.  
    c.  
    d.  

  15. Suppose a firm's total economic cost in producing 1,000 aluminum baseball bats is $10,000. These bats are then sold by the firm for $12,000. Thus:   (4 points)

    a.  
    b.  
    c.  
    d.  

  16. Suppose industry A is realizing substantial economic profit. Which of the following best describes the adjustment process that would bring about a new equilibrium?   (4 points)

    a.  
    b.  
    c.  
    d.  

  17. Which of the following best reflects the idea of "derived demand"?   (4 points)

    a.  
    b.  
    c.  
    d.  

  18. Answer the next question(s) using the following data which show all available techniques for producing 20 units of a particular commodity:



    Refer to the above data. Which of the following statements concerning this industry is correct?   (4 points)

    a.  
    b.  
    c.  
    d.  

  19. Answer the next question(s) using the following data which show all available techniques for producing 20 units of a particular commodity:



    Refer to the above data. 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:   (4 points)

    a.  
    b.  
    c.  
    d.  

  20. Answer the next question(s) 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.




    Refer to the above information. Which technique is economically most efficient in producing A?   (4 points)

    a.  
    b.  
    c.  
    d.  

  21. Assume the demand for product Y increases and the market system responds by producing more Y. This illustrates:   (4 points)

    a.  
    b.  
    c.  
    d.  

  22. Two major virtues of the market system are that it:   (4 points)

    a.  
    b.  
    c.  
    d.  

  23. (Last Word) According to economist Donald Boudreaux:   (4 points)

    a.  
    b.  
    c.  
    d.  

  24. Market economies use capital goods because they improve productive efficiency.   (4 points)

    a.  
    b.  

  25. Differences in opportunity costs are the basis for specialized production and trade.   (4 points)

    a.  
    b.  



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