POM EXAM 1 QUESTIONS AND ANSWERS
*A) Ownership of resources, and methods of coordinating economic activity.*
B) Quantity of output produced, and who receives the output.
C) Who produces the output, and what technology is used to produce it.
D) The system of government, and the quantity of natural resources available. -
Answers - Economic systems differ according to what two main characteristics?
A) a command system.
*B) a market system.*
C) communism.
D) socialism. - Answers - The private ownership of property resources and use of
prices to direct and coordinate economic activity is characteristic of:
A) consumers can never be sovereign.
B) markets can never be competitive.
*C) there is a reliance on the market system.*
D) the government owns the means of production - Answers - In a capitalistic
economy:
A) The production of goods and services is determined primarily by markets, but the
allocation of goods and services is determined primarily by government.
B) The production of goods and services is determined primarily by government, but the
allocation of goods and services is determined primarily by markets.
*C) The production and allocation of goods and services is determined primarily through
markets.*
D) The production and allocation of goods and services is determined primarily through
government. - Answers - Which statement best describes a capitalist economy?
A) extensive government constraints on individual behavior.
*B) private ownership of the means of production. *
C) government control of all production decisions.
D) government rationing of all goods and services. - Answers - The market system is
characterized by:
A) reduce unnecessary investment.
B) limit destructive economic growth.
C) create economic problems.
*D) encourage economic activity. * - Answers - In a market system, well-defined
property rights are important because they:
A) government set prices in all markets
B) reallocation of all resources from private to public uses
*C) the right to own private property and control resource use*
,D) central planning by government to provide goods and services - Answers - Which is
a major feature of the market system?
*A) property rights.*
B) the coincidence of wants.
C) the freedom of choice.
D) the freedom of enterprise. - Answers - Legal and social rules that affect the
ownership of property are:
A) competition.
*B) bequests. *
C) self-interest.
D) free enterprise. - Answers - The institution of private property is sustained over time
by:
A) unselfish individuals
B) centralized decision-making
*C) free enterprise and choice *
D) government ownership of the means of production - Answers - Which is
characteristic of the market system?
A) products are provided free to those who can't afford to buy them.
B) individual producers determine how to produce, but government agencies determine
what will be produced.
*C) individuals may obtain resources, organize production, and sell the resulting output
in any legal way they choose. *
D) individuals are free to produce those products that government agencies determine
can be produced profitably. - Answers - By free enterprise, we mean that:
A) The operation of a market system eventually results in an equal distribution of
income.
B) Producers are "kings" in a market economy because they determine what is
produced.
C) The market system is efficient at allocation of resources, but not consumer goods to
their most valued uses.
*D) Freedom of choice and enterprise are essential elements of the market system.* -
Answers - Which statement is correct?
A) workers.
B) consumers.
C) public officials.
*D) entrepreneurs.* - Answers - The maximization of profit and the minimization of
losses is the primary factor affecting the economic decision making of:
A) by minimizing the economic losses of other business firms
B) by maximizing the economic profits of other business firms
,C) by seeking the highest price when purchasing a consumer product
*D) by seeking jobs with the best combination of wages and benefits* - Answers - How
do workers typically express self-interest?
A) maximizing utility or satisfaction from limited incomes.
B) increasing the wages and salaries of workers.
*C) maximizing profits or minimizing losses.*
D) the selfish pursuit of money. - Answers - In a market economy, entrepreneurs are
most concerned with:
A) reduce business losses.
B) collect economic profits.
*C) seek the lowest price for a product.*
D) search for jobs with the highest wages - Answers - Consumers express self-interest
when they:
*A) there is free entry into and exit out of industries. *
B) there is a single supplier of all goods and services.
C) the government purchases most goods and services.
D) products are produced by a few large firms. - Answers - Competition is more likely
to exist when:
A) government licensing requirements in order to enter an industry
B) a small number of buyers and sellers in a market
*C) the freedom of sellers and buyers to enter or exit an industry *
D) the government serving as the only supplier of goods to consumers - Answers -
Which condition will encourage competition?
*A) large number of small firms facing a large number of small buyers. *
B) few large firms facing a large number of small buyers.
C) large number of small firms facing a few large buyers.
D) few small firms facing a few small buyers. - Answers - A competitive economy
assumes the existence in each industry of a:
A) there is more than one seller in a market.
B) a given product can be purchased at a range of prices.
*C) there are many independent buyers and sellers in a market. *
D) a few sellers attempt to garner a larger share of the market by cutting prices. -
Answers - Competition denotes a condition where:
A) The production of goods and services is determined primarily by markets, but the
allocation of goods and services is determined primarily by government.
B) The production of goods and services is determined primarily by government, but the
allocation of goods and services is determined primarily by markets.
C) The production and allocation of goods and services is determined primarily through
markets.
, *D) The production and allocation of goods and services is determined primarily through
government.* - Answers - Which statement best describes a command economy?
*A) government ownership of the factors of production *
B) competition and unrestricted markets
C) reliance on the market system
D) free enterprise and choice - Answers - Which would not be characteristic of a
capitalist economy?
A) wages paid to labor are higher.
*B) government owns most economic resources. *
C) free markets are never permitted in a command economy.
D) government planners play a limited role in deciding what goods will be produced. -
Answers - A basic characteristic of a command system is that:
A) produces more consumer goods than capital goods.
B) produces more capital goods than consumer goods.
*C) gives private individuals and institutions the right to own resources used in
production. *
D) gives the government the right to tax individuals and corporations for the production
of capital goods. - Answers - The market system is an economic system that:
A) the command system.
B) the socialist economy.
*C) the market system.*
D) the system of inputs and outputs. - Answers - Another term for capitalism is:
A) produces more capital goods than consumer goods.
B) produces more consumer goods than capital goods.
C) gives the government the right to tax individuals and corporations.
*D) gives private individuals and corporations the right to own productive resources.* -
Answers - Capitalism is an economic system that:
A) a market system.
B) pure capitalism.
C) laissez-faire capitalism.
*D) a command system. * - Answers - The Soviet Union economy of the 1980s would
best be classified as:
A) a command system.
B) socialism.
C) pure capitalism.
*D) a market system. * - Answers - The economy of Germany would best be classified
as:
A) a laissez-faire economy.
*A) Ownership of resources, and methods of coordinating economic activity.*
B) Quantity of output produced, and who receives the output.
C) Who produces the output, and what technology is used to produce it.
D) The system of government, and the quantity of natural resources available. -
Answers - Economic systems differ according to what two main characteristics?
A) a command system.
*B) a market system.*
C) communism.
D) socialism. - Answers - The private ownership of property resources and use of
prices to direct and coordinate economic activity is characteristic of:
A) consumers can never be sovereign.
B) markets can never be competitive.
*C) there is a reliance on the market system.*
D) the government owns the means of production - Answers - In a capitalistic
economy:
A) The production of goods and services is determined primarily by markets, but the
allocation of goods and services is determined primarily by government.
B) The production of goods and services is determined primarily by government, but the
allocation of goods and services is determined primarily by markets.
*C) The production and allocation of goods and services is determined primarily through
markets.*
D) The production and allocation of goods and services is determined primarily through
government. - Answers - Which statement best describes a capitalist economy?
A) extensive government constraints on individual behavior.
*B) private ownership of the means of production. *
C) government control of all production decisions.
D) government rationing of all goods and services. - Answers - The market system is
characterized by:
A) reduce unnecessary investment.
B) limit destructive economic growth.
C) create economic problems.
*D) encourage economic activity. * - Answers - In a market system, well-defined
property rights are important because they:
A) government set prices in all markets
B) reallocation of all resources from private to public uses
*C) the right to own private property and control resource use*
,D) central planning by government to provide goods and services - Answers - Which is
a major feature of the market system?
*A) property rights.*
B) the coincidence of wants.
C) the freedom of choice.
D) the freedom of enterprise. - Answers - Legal and social rules that affect the
ownership of property are:
A) competition.
*B) bequests. *
C) self-interest.
D) free enterprise. - Answers - The institution of private property is sustained over time
by:
A) unselfish individuals
B) centralized decision-making
*C) free enterprise and choice *
D) government ownership of the means of production - Answers - Which is
characteristic of the market system?
A) products are provided free to those who can't afford to buy them.
B) individual producers determine how to produce, but government agencies determine
what will be produced.
*C) individuals may obtain resources, organize production, and sell the resulting output
in any legal way they choose. *
D) individuals are free to produce those products that government agencies determine
can be produced profitably. - Answers - By free enterprise, we mean that:
A) The operation of a market system eventually results in an equal distribution of
income.
B) Producers are "kings" in a market economy because they determine what is
produced.
C) The market system is efficient at allocation of resources, but not consumer goods to
their most valued uses.
*D) Freedom of choice and enterprise are essential elements of the market system.* -
Answers - Which statement is correct?
A) workers.
B) consumers.
C) public officials.
*D) entrepreneurs.* - Answers - The maximization of profit and the minimization of
losses is the primary factor affecting the economic decision making of:
A) by minimizing the economic losses of other business firms
B) by maximizing the economic profits of other business firms
,C) by seeking the highest price when purchasing a consumer product
*D) by seeking jobs with the best combination of wages and benefits* - Answers - How
do workers typically express self-interest?
A) maximizing utility or satisfaction from limited incomes.
B) increasing the wages and salaries of workers.
*C) maximizing profits or minimizing losses.*
D) the selfish pursuit of money. - Answers - In a market economy, entrepreneurs are
most concerned with:
A) reduce business losses.
B) collect economic profits.
*C) seek the lowest price for a product.*
D) search for jobs with the highest wages - Answers - Consumers express self-interest
when they:
*A) there is free entry into and exit out of industries. *
B) there is a single supplier of all goods and services.
C) the government purchases most goods and services.
D) products are produced by a few large firms. - Answers - Competition is more likely
to exist when:
A) government licensing requirements in order to enter an industry
B) a small number of buyers and sellers in a market
*C) the freedom of sellers and buyers to enter or exit an industry *
D) the government serving as the only supplier of goods to consumers - Answers -
Which condition will encourage competition?
*A) large number of small firms facing a large number of small buyers. *
B) few large firms facing a large number of small buyers.
C) large number of small firms facing a few large buyers.
D) few small firms facing a few small buyers. - Answers - A competitive economy
assumes the existence in each industry of a:
A) there is more than one seller in a market.
B) a given product can be purchased at a range of prices.
*C) there are many independent buyers and sellers in a market. *
D) a few sellers attempt to garner a larger share of the market by cutting prices. -
Answers - Competition denotes a condition where:
A) The production of goods and services is determined primarily by markets, but the
allocation of goods and services is determined primarily by government.
B) The production of goods and services is determined primarily by government, but the
allocation of goods and services is determined primarily by markets.
C) The production and allocation of goods and services is determined primarily through
markets.
, *D) The production and allocation of goods and services is determined primarily through
government.* - Answers - Which statement best describes a command economy?
*A) government ownership of the factors of production *
B) competition and unrestricted markets
C) reliance on the market system
D) free enterprise and choice - Answers - Which would not be characteristic of a
capitalist economy?
A) wages paid to labor are higher.
*B) government owns most economic resources. *
C) free markets are never permitted in a command economy.
D) government planners play a limited role in deciding what goods will be produced. -
Answers - A basic characteristic of a command system is that:
A) produces more consumer goods than capital goods.
B) produces more capital goods than consumer goods.
*C) gives private individuals and institutions the right to own resources used in
production. *
D) gives the government the right to tax individuals and corporations for the production
of capital goods. - Answers - The market system is an economic system that:
A) the command system.
B) the socialist economy.
*C) the market system.*
D) the system of inputs and outputs. - Answers - Another term for capitalism is:
A) produces more capital goods than consumer goods.
B) produces more consumer goods than capital goods.
C) gives the government the right to tax individuals and corporations.
*D) gives private individuals and corporations the right to own productive resources.* -
Answers - Capitalism is an economic system that:
A) a market system.
B) pure capitalism.
C) laissez-faire capitalism.
*D) a command system. * - Answers - The Soviet Union economy of the 1980s would
best be classified as:
A) a command system.
B) socialism.
C) pure capitalism.
*D) a market system. * - Answers - The economy of Germany would best be classified
as:
A) a laissez-faire economy.
