Econ 1a

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Student: ___________________________________________________________________________ 1. Which of the following is a distinguishing feature of a command system? A. private ownership of all capital.

B. central planning.
C. heavy reliance on markets.
D. wide-spread dispersion of economic power.

2. Which of the following is a distinguishing feature of a market system? A. public ownership of all capital.
B. central planning.
C. wide-spread private ownership of capital.
D. a circular flow of goods, resources, and money.

3. Examples of command economies are:
A. The United States and Japan.
B. Sweden and Norway.
C. Mexico and Brazil.
D. Cuba and North Korea.
4. Of the following countries, which one best exhibits the characteristics of a market economy? A. Canada.
B. Cuba.
C. North Korea.
D. China.
5. The French term "laissez-faire" means:
A. "there is no free lunch."
B. "let it be."
C. "circular flow."
D. "public ownership."
6. An economic system:
A. requires a grouping of private markets linked to one another. B.
is a particular set of institutional arrangements and a coordinating mechanism used to respond to the economizing problem.
C. requires some sort of centralized authority (such as government) to coordinate economic activity. D. is a plan or scheme that allows a firm to make money at some other firm's expense. 7. The term laissez-faire suggests that:

A. land and other natural resources should be privately owned, but capital should be publicly owned. B. land and other natural resources should be publicly owned, but capital should be privately owned. C. government should not interfere with the operation of the economy. D. government action is necessary if the economy is to achieve full employment and full production. 8. Economic systems differ according to which two main characteristics? A. Who owns the factors of production, and the methods used to coordinate economic activity. B. The technology used in production, and the quantity and quality of natural resources. C. How goods are produced, and who gets them.

D. The political system in place, and the degree of scarcity facing the economy. 9. Command systems are also known as:
A. market systems.
B. pure capitalism.
C. laissez-faire capitalism.
D. communism.
10. A fundamental difference between the command system and the market system is that, in command systems:
A.
the division of output is decided by central planning rather than by individuals operating freely through markets.
B.
all economic decisions are made by the government, whereas there is no government in a market system.
C. scarcity does not exist, whereas it does in a market system. D. money is not used, whereas it is in a market system.
11. Which of the following is not a characteristic of the market system? A. private property.
B. freedom of enterprise.
C. government ownership of major industries.
D. competition in product and resource markets.
12. Which of the following is a fundamental characteristic of the market system? A. property rights.
B. central planning by government.
C. unselfish behavior.
D. government-set wages and prices.
13. Property rights are important because they:
A. ensure an equal distribution of income.
B. encourage cooperation by improving the chances of mutually agreeable transactions. C. guarantee that any exchange will make all parties better off than prior to the exchange. D. allow the government to control how resources are allocated. 14. Private property:

A. discourages cooperation because people don't want to part with what they own. B. discourages innovation, as people are often afraid to risk losing their own property. C. encourages owners to maintain or improve their property, so as to preserve or enhance value. D. does everything indicated by the other answers.

15. Copyrights and trademarks are examples of:
A. capital goods.
B. human capital.
C. property rights.
D. public goods.
16. The regulatory mechanism of the market...
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