question
The production possibilities curve shows:
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the various combinations of two goods which can be produced when society uses its scarce resources efficiently
question
The term "other things equal" means that:
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the assumption that factors other than those being considered do not change.
question
Which of the following is not an illustration of the idea of opportunity cost?
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A growing economy can produce more consumer goods and more capital goods at the same time.
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If we are considering the relationship between two variables and release the "other things equal" assumption, we would expect:
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the line representing that relationship on a graph to change locations.
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If we say that two variables are directly related, this means that:
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an increase in one variable is associated with an increase in the other variable.
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Any point inside the production possibilities curve indicates:
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that more output could be produced with available resources.
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Economic resources are also called:
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factors of production.
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A characteristic of the market system is:
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extensive use of capital goods.
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The market system is characterized by:
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private ownership of the means of production.
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Which fundamental question about a competitive market system primarily focuses on technological progress and capital accumulation?
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How will the system accommodate change?
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By free enterprise, we mean that:
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individuals may obtain resources, organize production, and sell the resulting output in any legal way they choose.
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The development of MP3 players that significantly reduce the market for CDs and DVDs would be an example of:
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creative destruction.
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Which is a major feature of pure capitalism?
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the right to own private property and control resource use
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In the factor market:
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households sell resources to businesses.
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Suppose industry A is realizing substantial economic profits. Which of the following best describes the adjustment process which would bring about a new equilibrium?
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Firms will enter the industry, output will rise, and product price will fall.
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The term "laissez faire" suggests that:
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government should not interfere with the operation of the economy.
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The market system automatically corrects a surplus condition in a competitive market by:
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reducing the price of the commodity in question while increasing the quantity demanded.
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What is the likely effect on the market for wine of a simultaneous increase in both consumer incomes and producer taxes on wine?
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an increase in price and an indeterminate effect on quantity
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If L and M are complementary goods, an increase in the price of L will result in:
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a decrease in the sales of M.
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Superstar rock singers may set concert ticket prices below the equilibrium level because:
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the behaviour of fans in attempting to get tickets generates publicity and sold-out concerts promote record sales.
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If demand for a good decreases and supply remains constant, equilibrium price:
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and quantity will both decrease.
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Which of the following will not cause the demand for product K to change?
answer
a change in the price of K
question
If an effective ceiling price is placed on gasoline then:
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- the quantity demanded will exceed the quantity supplied.
- the ceiling price will be below the equilibrium price.
- the federal government must establish some formal system for rationing it to consumers.
- the ceiling price will be below the equilibrium price.
- the federal government must establish some formal system for rationing it to consumers.
question
The horizontal axis of a graph which shows a market demand curve indicates the:
answer
quantities which consumers will be willing and able to buy at various prices.
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Which of the following statements is correct?
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An increase in the price of C will decrease the demand for complementary product D.
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A normal good is defined as one:
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the consumption of which varies directly with incomes.
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An "increase in the quantity demanded" means that:
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price has declined and consumers therefore want to purchase more of the product.
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If the market price is above the equilibrium price:
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a surplus will occur and producers will produce less and lower prices.
question
Which of the following would usually be an inferior good?
answer
generic beer
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