ECON 208 Chapter Notes -Mixed Economy, Free Market

79 views3 pages

peachdeer29

23 Mar 2012

School

Department

Course

Professor

For unlimited access to Textbook Notes, a Class+ subscription is required.

selin.aksezgin and 39983 others unlocked

ECON 208 Full Course Notes

Verified Note

27 documents

Document Summary

Economy: a system in which scarce resources are allocated among competing uses. An economy based on free-market transactions is self-organizing. Spontaneous economic order is produced when people follow their own self-interest. It is self-interest rather than benevolence that motivates people: therefore, self-interest is the foundation of economic order. Efficiency is attained when the largest amount of goods and services are produced with the least possible amount of resources. Free-markets are guided by an invisible hand : referring to the spontaneous order that is produced. Self-interest: buying and selling what seems best for them. Incentives: sellers want to sell more when prices are high and buyers want to buy more when prices are low. All activities in the market are governed by institutions: private property, freedom of contract, the rule of law. Three categories: land, labour, and capital: land: what exists naturally (forests, lakes, crude oil, labour: mental and physical human resources, capital: aids to production (tools, machinery, buildings)

Related Questions

Part 1.Choose the correct answer of the following:

1.In a market economy, economic activity is guided by

a.Self-interest and prices

b.The government.

c.Corporations.

d. Central planners.

2. Which of the following decisions must be made by all economies?

a.How much to produce? When to produce? How much does it cost?

b.What to produce? How to produce? For whom to produce?

c.What is the price? Who will produce it? Who will consume it?

d. None of the above

3.Since the resources used in the production of goods and services are limited, society must:

a.Reduce the use of those resources

b.Try to get more resources

c.Make choices about how to use resources

d.Focus on their most abundant resource

4.Which of the following observations was made famous by Adam Smith in his book The Wealth of Nations?

a.Households and firms interacting in markets are guided by an "invisible hand" that leads them to desirable market outcomes.

b.There is no such thing as a free lunch.

c.People buy more when prices are low than when prices are high.

d. No matter how much people earn, they tend to spend more than they earn.

5.If real GDP increased by 2 percent, then

a.Government spending increased by 2 percent

b.The price level has increased by 2 percent

c.Real output/production has increased by 2 percent

d. The increase might have been caused by an increase in the price level or output, but we cannot tell for sure

6. Which of the following would show an efficient economy?

a.Uses the least costly amount of resources available

b.Has a small amount of people who do not work

c.Resources are used to make the most goods and services possible

d.None of the above

7.What is the type of unemployment that occurs when people take time to find a job?

a.cyclical

b.frictional

c.Disguised

d.structural

emeraldoyster872

The production possibilities frontier model shows that

a) if consumers decide to buy more of a product its price will increase.

b) a market economy is more efficient in producing goods and services than is a centrally planned economy.

c) economic growth can only be achieved by free-market economies

d) if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good.

browncricket276

which of the following is a characteristic of a pure command economy?

a. all resources are privately owned

b. economic activity is coordinated by the price system

c. competitive markets guide resources to their highest-valued uses

d. centralized economic planning is used to answer the basic economic questions

e. economic choices are voluntary and are based on rational self-interest

salmonraccoon110

ECON 208 Chapter Notes -Mixed Economy, Free Market

ECON 208 Full Course Notes

Document Summary

Get access

Related Documents

ECON 208 Chapter 1: ECON 208 Chapter 1 Textbook Notes.pdf

ECON 208 Chapter Notes -Rational Ignorance, Public Health Insurance Option, Adverse Selection

ECON 208 Lecture Notes - Opportunity Cost, Barter, Resource Allocation

Related Questions