Question 1

For any combination or outputs,there is an efficient allocation of income.

Accepted Answer

A) True 
 B)False

Question 2

Higher prices

Accepted Answer

A)  are always against the public interest.
B)  may sometimes serve the public interest.
C)  should never be allowed.
D)  occur automatically for abundant goods.

Question 3

"Peak pricing" can often improve economic efficiency.

Accepted Answer

A) True 
 B)False

Question 4

In an efficient market,a scarce good generally has a ____ than a less-scarce good.

Accepted Answer

A)  higher price
B)  higher total utility to consumers
C)  more even distribution across income classes
D)  lower price in off-peak periods

Question 5

"Peak pricing" involves setting lower prices at peak times so that people can afford a good or service.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following functions is not performed by prices in a free market?

Accepted Answer

A)  guiding the allocation of resources
B)  conveying information about the marginal cost of production
C)  making the distribution of income more equitable
D)  replacing the need for governmental supervision of production

Question 7

In a market system,the primary instruments used to coordinate economic activity are

Accepted Answer

A)  plans.
B)  prices.
C)  input-output analyses.
D)  quantities.

Question 8

What is the rule for efficient output selection and how does the competitive market achieve it?

Accepted Answer

The rule is MC = MU.In competition,MC = ...

Question 9

In a free-market economy,the pricing mechanism always operates to

Accepted Answer

A)  produce an equitable distribution of income.
B)  provide an efficient allocation of resources.
C)  correct any inequality in distribution of output.
D)  equate consumers' desires with ability to pay.

Question 10

Many persons object to the results of the competitive market system because

Accepted Answer

A)  it takes too much energy to coordinate activities.
B)  efficient outcomes may not be compatible with their ideas of a fair distribution.
C)  a few people can control all economic activity.
D)  it fosters high rents and low beef prices.

Question 11

Which of the following statements concerning efficiency is correct?

Accepted Answer

A)  If a toll road is heavily used so that traffic movement is slowed, the price per vehicle should be reduced since the road is generating more revenue.
B)  Economists advocate high prices for abundant resources and low prices for scarce resources.
C)  If a toll road is heavily used and traffic movement is difficult, the price per vehicle should be increased to shift some traffic to less-crowded roads.
D)  None of the above is desirable in promoting efficient use of scarce road space.

Question 12

Which of the following carries out the distribution process by rationing goods on the basis of preferences and relative incomes?

Accepted Answer

A)  Administered system
B)  Government
C)  Price system
D)  Central planning

Question 13

Prohibiting price increases in situations of true scarcity

Accepted Answer

A)  prevents the market mechanism from reallocating resources more efficiently.
B)  discourages production.
C)  may lead to extreme shortages of vitally needed products.
D)  All of the above are correct.

Question 14

The selection of particular products' production processes

Accepted Answer

A)  determines the output of other products made with those inputs at the same time.
B)  is part of the distribution problem in an economy.
C)  is accomplished without regard to profit in a laissez-faire economy.
D)  depends upon plans for distribution of the products.

Question 15

Which of the following is concerned with the distribution part of resource allocation?

Accepted Answer

A)  An economy decides to produce equal quantities wheat, rice, and clothes.
B)  An economy decides to use 25% of the available capital for producing clothes.
C)  An economy decides to ration 40% of its output to low income groups.
D)  An economy decides to use more labor for producing wheat and rice.

Question 16

The production possibilities frontier illustrates

Accepted Answer

A)  the constant rate of technological progress.
B)  the fundamental concept of scarcity.
C)  the rapid growth of the U.S. economy.
D)  that guns always trade for butter.

Question 17

In an effort to prepare for war,the Defense Department is required by Congress to stockpile helium,once used to provide lift for blimps (phased out in the 1960s).About 100 years of total U.S.usage of helium is in storage.The Pentagon agrees to buy helium from producers at a price above what would otherwise prevail in the marketplace.Is this likely to result in efficiency? Explain.

Accepted Answer

No.If the price is held up to provide a ...

Question 18

The issue of fairness versus efficiency arises

Accepted Answer

A)  only in a command economy.
B)  only in a market economy.
C)  in neither a command nor a market economy.
D)  in both a command and a market economy.

Question 19

Before a market allocation of goods on the production possibilities curve can be judged efficient,one must evaluate "what" goods the market produced.

Accepted Answer

A) True 
 B)False

Question 20

Questions of what to produce,how much to produce,and who will get the output must be faced by

Accepted Answer

A)  market economies.
B)  centrally planned economies.
C)  the economies of underdeveloped countries.
D)  all economies.

Exam 14: The Case for Free Markets I: the Price System

The selection of particular products' production processes

Correct Answer
verified

In an efficient market,a scarce good generally has a ____ than a less-scarce good.

Correct Answer
verified

Many persons object to the results of the competitive market system because

Correct Answer
verified

The production possibilities frontier illustrates

Correct Answer
verified

Which of the following functions is not performed by prices in a free market?

Correct Answer
verified

Questions of what to produce,how much to produce,and who will get the output must be faced by

Correct Answer
verified

For any combination or outputs,there is an efficient allocation of income.

Correct Answer
verified

Prohibiting price increases in situations of true scarcity

Correct Answer
verified

The issue of fairness versus efficiency arises

Correct Answer
verified

Which of the following statements concerning efficiency is correct?

Correct Answer
verified

"Peak pricing" can often improve economic efficiency.

Correct Answer
verified

Higher prices

Correct Answer
verified

Which of the following carries out the distribution process by rationing goods on the basis of preferences and relative incomes?

Correct Answer
verified

In a free-market economy,the pricing mechanism always operates to

Correct Answer
verified

Before a market allocation of goods on the production possibilities curve can be judged efficient,one must evaluate "what" goods the market produced.

Correct Answer
verified

Correct Answer
verified
No.If the price is held up to provide a ...
View Answer

Which of the following is concerned with the distribution part of resource allocation?

Correct Answer
verified

In a market system,the primary instruments used to coordinate economic activity are

Correct Answer
verified

What is the rule for efficient output selection and how does the competitive market achieve it?

Correct Answer
verified
The rule is MC = MU.In competition,MC = ...
View Answer

"Peak pricing" involves setting lower prices at peak times so that people can afford a good or service.

Correct Answer
verified

Exam 14: The Case for Free Markets I: the Price System

The selection of particular products' production processes

Correct AnswerverifiedShow Answer

In an efficient market,a scarce good generally has a ____ than a less-scarce good.

Correct AnswerverifiedShow Answer

Many persons object to the results of the competitive market system because

Correct AnswerverifiedShow Answer

The production possibilities frontier illustrates

Correct AnswerverifiedShow Answer

Which of the following functions is not performed by prices in a free market?

Correct AnswerverifiedShow Answer

Questions of what to produce,how much to produce,and who will get the output must be faced by

Correct AnswerverifiedShow Answer

For any combination or outputs,there is an efficient allocation of income.

Correct AnswerverifiedShow Answer

Prohibiting price increases in situations of true scarcity

Correct AnswerverifiedShow Answer

The issue of fairness versus efficiency arises

Correct AnswerverifiedShow Answer

Which of the following statements concerning efficiency is correct?

Correct AnswerverifiedShow Answer

"Peak pricing" can often improve economic efficiency.

Correct AnswerverifiedShow Answer

Higher prices

Correct AnswerverifiedShow Answer

Which of the following carries out the distribution process by rationing goods on the basis of preferences and relative incomes?

Correct AnswerverifiedShow Answer

In a free-market economy,the pricing mechanism always operates to

Correct AnswerverifiedShow Answer

Before a market allocation of goods on the production possibilities curve can be judged efficient,one must evaluate "what" goods the market produced.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedNo.If the price is held up to provide a ...View AnswerShow Answer

Which of the following is concerned with the distribution part of resource allocation?

Correct AnswerverifiedShow Answer

In a market system,the primary instruments used to coordinate economic activity are

Correct AnswerverifiedShow Answer

What is the rule for efficient output selection and how does the competitive market achieve it?

Correct AnswerverifiedThe rule is MC = MU.In competition,MC = ...View AnswerShow Answer

"Peak pricing" involves setting lower prices at peak times so that people can afford a good or service.

Correct AnswerverifiedShow Answer

Correct Answer
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No.If the price is held up to provide a ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The rule is MC = MU.In competition,MC = ...
View Answer

Correct Answer
verified