Multiple Choice Questions:
1. Which of the following is not a question that all societies must answer?
a. How can scarcity be eliminated?
b. What goods and services will be produced?
c. Who will get the goods and services?
d. How will the goods and services be produced?
e. All of the above are questions that all societies must answer.
2. Economic disputes over the distribution of income are generally associated with which economic question?
a. Who should produce the goods?
b. What goods and services will be produced?
c. Who will get the goods and services?
d. How will the goods and services be produced?
3. Three economic questions must be determined in all societies. What are they?
a. How much will be produced? When will it be produced? How much will it cost?
b. What will the price of each good be? Who will produce each good? Who will consume each good?
c. What is the opportunity cost of production? Does the society have a comparative advantage in production? Will consumers desire the goods being produced?
d. What goods and services will be produced? How will the goods and services be produced? Who will get the goods and services?
4. The private ownership of property and the use of the market system to direct and coordinate economic activity are most characteristic of
a. A command economy.
b. A mixed economy.
c. A market economy.
d. A traditional economy.
5. The degree of government involvement in the economy is greatest in
a. A command economy.
b. A mixed economy.
c. A market economy.
d. A traditional economy.
6. When a command economy is utilized to resolve economic questions regarding the allocation of resources, then
a. Everyone will receive an equal share of the output produced.
b. The preferences of individuals are of no importance.
c. Economic efficiency will be assured.
d. The role of markets will be replaced by political decision making.
7. In a circular flow diagram,
a. Goods and services flow in a clockwise direction.
b. Goods and services flow in a counterclockwise direction.
c. Product markets appear at the top of the diagram.
d. Factor markets appear at the left of the diagram.
e. Both b and c are true.
8. Which of the following is true?
a. In the product markets, firms are buyers and households are sellers.
b. In the factor markets, firms are sellers and households are buyers.
c. Firms receive money payments from households for capital, land, labor, and entrepreneurship.
d. All of the above are true.
e. None of the above are true.
9. In the circular flow model,
a. firms supply both products and resources.
b. firms demand both products and resources.
c. firms demand resources and supply products.
d. firms supply resources and demand products.
10. A point beyond the boundary of an economy's production possibilities curve is
a. Efficient.
b. Inefficient.
c. Attainable.
d. Unattainable.
e. Both attainable and efficient.