Econ 1a

Student1. Which of the next is a distinguishing possess of a postulate dodging? A. cloistered ownership of solely chief city. B. inter pitch planning. C. soggy reliance on grocery store places. D. wide-spread dispersion of sparing power.2. Which of the side by side(p) is a distinguishing feature of a grocery store form? A. habitual ownership of each heavy(p). B. of import planning. C. wide-spread private ownership of great. D. a bank note stop of goods, preferences, and property.3. Examples of assertion economies be A. The United States and Japan. B. Sweden and Norway. C. Mexico and Brazil. D. Cuba and northward Korea.4. Of the following countries, which unmatch up to(p) exceed exhibits the characteristics of a commercialize miserliness? A. Canada. B. Cuba. C. North Korea. D. China.5. The French term laissez-faire content A. in that respect is no free lunch. B. let it be. C. pear-shaped operate. D. public ownership. 6. An economic agreement A. requires a grouping of private merchandises linked to one an opposite. B. is a exceptional set of institutional arrangements and a coordinating mechanism utilise to suffice to the economizing occupation. C. requires some sort of importantized authority (such as governing) to oordinate economic activity. D. is a plan or scheme that departs a fast to make bills at some an separate(prenominal) firms expense.7. The term laissez-faire counsels that A. land and other essential resourcefulnesss should be privately owned, entirely capital should be publically owned. B. land and other natural resources should be publicly owned, only if capital should be privately owned. C. governing body should non interfere with the operation of the economy. D. presidency action is undeniable if the economy is to achieve all-inclusive employment and full intersectionion.8. Economic systems differ according to which two main characteristics? A. Who owns the positionors of createion , and the methods single-valued meshd to ordain economic activity. B. The technology used in mathematical intersection point, and the measurement and quality of natural resources. C. How goods atomic number 18 attaind, and who communicates them. D. The political system in place, and the degree of scarcity lining the economy.9. Command systems argon also known as A. commercialise systems. B. sublimate capitalism. C. laissez-faire capitalism. D. communism.10. A natural frequency difference amidst the command system and the foodstuff system is that, in command systems A. the division of output signal is heady by central planning rather than by individuals operating freely through markets. B. all economic decisions argon made by the authorities, whereas thither is no government in a market system. C. scarcity does non exist, whereas it does in a market system. D. currency is not used, whereas it is in a market system.11. Which of the following is not a characterist ic of the market system? A. private property. B. freedom of enterprise. C. government ownership of major industries. D. competitor in harvest-festival and resource markets.12. Which of the following is a unsounded characteristic of the market system? A. property rights. B. central planning by government. C. unselfish behavior. D. government-set earnings and prices.13. Property rights ar important because they A. ensure an equal dispersal of income. B. countenance cooperation by improving the chances of mutually agreeable transactions. C. guarantee that any fill in volition make all parties better off than prior to the stand in. D. allow the government to control how resources argon allocated.14. Private property A. discourages cooperation because hoi polloi dont essential to part with what they own. B. discourages vicissitude, as people are oftentimes afraid to luck losing their own property. C. encourages owners to maintain or improve their property, so as to act up or enhance value. D. does everything indicated by the other answers.15. Copyrights and quite a littlemarks are physical exercises of A. capital goods. B. compassionate capital. C. property rights. D. public goods.16. The regulatory mechanism of the market system is A. self-interest. B. private property. C. competition. D. specialization.17. Broadly defined, competition involves A. private property and freedom of expression. B. independently playacting buyers and sellers and freedom to enter or set forth markets. C. increase probability cost and diminishing marginal utility. D. capital goods and division of wear upon.18. Competition means that A. sellers piece of tail manipulate market price by ca employ product scarcities. B. in that respect are independently-acting buyers and sellers in severally market. C. a product can be purchased at a itemise of different prices. D. in that location is more than one seller in a market.19. The division of apprehend means that A. la bor markets are geographically segmented. B. unskilled workers outnumber skilled workers. C. workers specialize in various production tasks. D. each worker performs a large number of tasks.20. Specialization in production is important in the main because it A. results in greater issue forth output. B. llows hostelry to avoid the coincidence-of-wants worry. C. allows society to trade by barter. D. allows society to sport fewer capital goods.21. Specialization-the division of labor-enhances productivity and efficiency by A. allowing workers to arrogate advantage of actual differences in their abilities and skills. B. avoiding the time loss gnarled in shifting from one production task to another. C. allowing workers to develop skills by working on one, or a limited number, of tasks. D. all of the means identified in the other answers.22. Specialization in production is economically beneficial primarily because it A. llows everyone to have a job which they like. B. permits the p roduction of a larger output with fixed amounts of resources. C. facilitates trade by bartering. D. guarantees full employment.23. On the basis of the above information it can be said that A. no coincidence of wants exists amongst any two states. B. a coincidence of wants exists between air mile and Washington. C. a coincidence of wants exists between Texas and Washington. D. a coincidence of wants exists between Michigan and Texas.24. On the basis of the above information and assuming trade occurs between the three states we can expect A. Washington to ex transport apples with Texas and contract capital in return. B. Washington to exchange apples with Michigan and receive capital in return. C. Texas to exchange lettuce with Michigan and receive autos in return. D. Texas to trade lettuce straightaway for Washington apples.25. Given the above information and assuming trade occurs between the three states we can expect A. that thither is no means by which Michigan can obtain le ttuce while specializing in the production of autos. B. that money exit not be needed to accomplish the sought after exchanges. C. money to flow counterclockwise from Michigan to Texas to Washington. D. money to flow clockwise from Michigan to Washington to Texas.26. Barter A. is the major means of exchange in centrally planned economies. B. accounts for over 30 percent of the sawhorse volume of all exchange in the U. S. economy. C. entails the exchange of goods for goods. D. is used to circumvent the problem of a lack of coincidence of wants among say-so buyers and sellers.27. The coincidence of wants problem associated with barter refers to the accompaniment that A. for exchange to occur each seller must have a product that some buyer wants. B. money must be used as a medium of exchange or trade result neer occur. C. specialization is restricted by the size or oscilloscope of a market. D. buyers in resource markets and sellers in product markets can never engage in exchang e.28. The use of money tops to economic efficiency because A. governmental direction of the production and statistical dispersion of output can be avoided by using money. B. roundabout production could not occur without the availability of money. C. it is necessary for the creation of capital goods. D. it get aheads specialization by overcoming the problems with barter.29. The presence of market failures implies that A. oney is not an marrowive tool for exchange in a market system. B. thither is an active role for government, evening in a market system. C. individuals and firms should puree to be self-sufficient rather than specialize. D. command systems are superior to market systems in the storage allocation of resources.30. Which of the following characteristics is least unique to a market system? A. private ownership of property resources B. competition among buyers and sellers pursuing financial returns C. the widespread use of money D. freedom of enterprise and choice3 1. Which of the following is one of the Five Fundamental Questions? A. Which products leave alone be in meagerly supply and which in superfluous supply? B. Who should ap stoppage the head of the central bank? C. How ofttimes should society save? D. What goods and serve testament be produced?32. If agonistic constancy Z is making substantial economic addition, output give A. fall in attention Z, and firms will likely leave the market. B. fall in all industries except attention Z. C. overstate in constancy Z, as more resources will impel to that industry. D. expand in industry Z, but no mod firms will enter the market.33. From societys point of view the economic lead of receiptss and losings is to A. romote the equal distribution of real assets and wealth. B. achieve full employment and price level stability. C. contribute to a more equal distribution of income. D. reallocate resources from less commitd to more desired uses.34. In a market economy a significant cha nge in consumers desire for product X will A. alter the networks or losses received by suppliers of product X. B. cause a reallocation of scarce resources. C. cause some industries to expand and others to contract. D. do all of these.35. Economic profits in an industry suggest the industry A. can earn more profits by increasing product price. B. should be larger to better satisfy consumers desire for the product. C. has excess production capacity. D. is the size that consumers want it to be.36. Economic profits and losses A. are both considered by economists to be a part of production costs. B. are essential to the reallocation of resources from less desired to more desired goods. C. have no influence on the composition of domestic output. D. equalize the distribution of income in the long run.37. If consumer desire for product X increases, all of the following will occur except A. an increase in the profits of industry X. B. n increase in the quantity of resources employed by indu stry X. C. an increase in the output of industry X. D. a decrease in the quantity of resources employed in industry X.38. An increase in consumer desire for st defenselessberries is well-nigh likely to A. increase the number of strawberry extracters needed by farmers. B. reduce the supply of strawberries. C. reduce the number of people willing to pick strawberries. D. reduce the need for strawberry pickers.39. If war-ridden industry Y is determine substantial losses, output will A. expand as resources move toward industry Y. B. contract as resources move toward industry Y. C. contract as resources move away from industry Y. D. expand as resources move away from industry Y.40. The economic function of profits and losses is to A. bring about a more equal distribution of income. B. signal that resources should be reallocated. C. eliminate pocketable firms and reduce competition. D. tell government which industries need to be subsidized.41. If a militant industry is neither expandi ng nor contracting, we would expect A. total revenue to be zero. B. economic profits to be zero. C. total opportunity cost to be zero. D. more resources to flow to that industry.42. The competitive market system A . encourages innovation because government provides revenue breaks and subsidies to those who develop clean products or new reproductive proficiencys. B. discourages innovation because it is difficult to acquire additional capital in the form of new machinery and equipment. C. discourages innovation because firms want to get all the profits possible from existing machinery and equipment. D. encourages innovation because triumphful innovators are rewarded with economic profits.43. In a market economy the distribution of output will be determined primarily by A. consumer needs and preferences. B. the quantities and prices of the resources that households supply. C. government regulations that provide a minimum income for all. D. a mixer consensus as to which distributio n of income is most equitable.44. The most efficient compounding of resources in producing a given output is the combination that A. comes closest to using the same quantities of land, labor, capital, and entrepreneurial ability. B. can be obtained for the smallest money outlay. C. uses the smallest total quantity of all resources. D. conserves most on the use of labor.45. Firms are actuate to minimize production costs because A. t is the most environmentally genial way to produce goods. B. least-cost production proficiencys use the smallest total quantity of resources. C. competitive pressures in the market will drive out higher-cost producers. D. the government provides tax credits and subsidies to low-cost producers. Answer the next question(s) using the following information which show all open techniques for producing 20 units of a particular good46. Refer to the above data. In view of the indicated resource prices, the economically most efficient production technique(s) i s (are) technique(s) A. 1. B. 2 and 4. C. 3. D. 1 and 3.47. Refer to the above data. assuming that the firm is motivated by self-interest and that the 20 units which can be produced with each technique can be sold for $2 per unit, the firm will A. realize an economic profit of $10. B. realize an economic profit of $4. C. not earn any economic profit. D. shutdown rather than incur a loss by producing.48. Refer to the above data. If a new production technique is developed that enables a firm to produce 20 units of output with 3 units of land, 3 of labor, 1 of capital, and 2 of entrepreneurial ability, this technique would A. not be adopted because, although it reduces production costs, it does not increase profit. B. be adopted because it would lower production costs and increase economic profit. C. not be adopted because it entails higher production costs than other available techniques. D. be adopted, even though economic profits would be bring down slightly. Answer the next quest ion(s) on the basis of the following information approximate 30 units of product A can be produced by employing well(p) labor and capital in the four ways shown below. Assume the prices of labor and capital are $2 and $3 respectively.49. Refer to the above information. Which technique is economically most efficient in producing A? A. I B. II C. III D. IV50. Refer to the above information. If the price of product A is $0. 50, the firm will realize A. an economic profit of $4. B. an economic profit of $2. C. an economic profit of $6. D. a loss of $3.51. In a competitive market economy firms select the least-cost production technique because A. such choices will result in full employment of available resources. B. to do so will maximize the firms profits. C. this will prevent new firms from entering the industry. D. dollar voting by consumers mandates such a choice.52. The market systems answer to the fundamental question What will be produced? is essentially A. Goods and go that a re profitable. B. paltry cost goods and function. C. Goods and service that can be produced using large amounts of capital. D. Goods and work that possess lasting value. 53. The market systems answer to the fundamental question How will the goods and services be produced? is essentially A. With as much machinery as possible. B. development the latest technology. C. By exploiting labor. D. Using the least-cost production techniques. 54. The market systems answer to the fundamental question Who will get the goods and services? is essentially A. Those willing and able to pay for them. B. Those who physically produced them. C. Those who most need them. D. Those who get utility from them. 55. The market systems answer to the fundamental question How will the system accommodate change? is essentially A. Through government leadership and direction. B. Through the guiding function of prices and the incentive function of profits. C. Through training and retraining programs. D. Through running game and error. 56. The market systems answer to the fundamental question How will the system throw out progress? is essentially A. Through government funded research programs. B. Through redistribution of income to promote greater equality. C. Through training and retraining programs. D. Through the profit potential that encourages development of new technology. 57. The advent of DVDs has virtually demolished the market for videocassettes. This is an example of A. creative destruction. B. derived demand. C. apital accumulation. D. the difference between normal and economic profits.58. Consumer sovereignty refers to the A. fact that resource prices are higher than product prices in capitalistic economies. B. desire that the pursuit of self-interest is in the public interest. C. radical that the decisions of producers must in the end conform to consumer demands. D. fact that a Federal agency exists to protect consumers from evil and defective products.5 9. The dollar votes of consumers ultimately determine the composition of output and the allocation of resources in a market economy. This statement best describes the concept of A. derived demand. B. consumer sovereignty. C. the hidden hand. D. market failure.60. Which of the following is not one of the five fundamental questions? A. What prices will be charged for goods and services? B. Who will get the goods and services? C. What goods and services will be produced? D. How will the system promote progress?61. Consumer sovereignty means that A. buyers can dictate the prices at which goods and services will be purchased. B. advertising is ineffective because consumers already know what they want. C. uyers control the quality of goods and services through regulatory agencies. D. buyers determine what will be produced based on their dollar votes for the goods and services offered by sellers.62. Which of the following best describes the unseeable-hand concept? A. The desires of resou rce suppliers and producers to further their own self-interest will automatically further the public interest. B. The non-substitutability of resources creates a conflict between private and public interests and calls for government intervention. C. The market system is the best system for overcoming the scarce resources-unlimited wants problem. D. Central direction by the government will improve resource allocation in a capitalistic economy.63. The invisible hand refers to the A. fact that the U. S. tax system redistributes income from loaded to poor. B. notion that, down the stairs(a)(a) competition, decisions motivated by self-interest promote the social interest. C. functionency of monopolistic sellers to overdress prices above competitive levels. D. fact that government controls the functioning of the market system.64. The invisible hand concept suggests that A. market failures regard the need for a national economic plan. B. ig businesses are inherently more efficient t han small businesses. C. the competitiveness of a capitalistic market economy invariably diminishes over time. D. assuming competition, private and public interests will coincide.65. Two major virtues of the market system are that it A. allocates resources efficiently and allows economic freedom. B. results in an equitable personal distribution of income and always maintains full employment. C. results in price level stability and a fair personal distribution of income. D. eliminates discrimination and minimizes environmental pollution.66. The market system A. produces considerable inefficiency in the use of scarce resources. B. effectively harnesses the incentives of workers and entrepreneurs. C. is not consistent with freedom of choice in the long run. D. has slowly lost ground to emerging command systems.67. consort to the concept of the invisible hand, if Susie opens and operates a profitable childcare center, then A. government should regulate the business to ensure quality. B . the profit Susie earns indicates that she is overcharging for her services. C. she has served societys interests by providing a desired good or service. D. his demonstrates that consumer sovereignty is not present in this market.68. The invisible hand promotes societys interests because A. individuals pursuing their self-interest will try to produce goods and services that people in society want and are willing to purchase. B. individuals will produce goods for others out of concern for their fellow human beings. C. it makes sure that everyone wins from competition in the market. D. government regulation pushes business into producing the right mix of goods and services.69. The coordination problem in the centrally planned economies refers to the idea that A. lanners had to direct required inputs to each enterprise. B. the price level and the level of employment were inversely related. C. the nimble effect of more investment was less consumption. D. exports had to be equal to imp orts for a central plan to work.70. Under central planning, some group has to decide how to get the necessary inputs produced in the right amounts and delivered to the right places at the right time. This is a roughly impossible task without markets and profits. This character best identifies the A. incentive problem under central planning. B. oordination problem under central planning. C. self-sufficiency predicament under communism. D. resource over-commitment problem under communism.71. Because the outputs of many industries are the inputs to other industries, the failure of any single industry to fulfill the output quantities condition in the central plan caused a chain-reaction of adverse repercussions on production. This quotation best identifies the A. incentive problem under central planning. B. self-sufficiency dilemma under communism. C. resource over-commitment problem under communism. D. coordination problem under central planning.72. The incentive problem under c ommunist central planning refers to the idea that A. planners had to direct required inputs to each enterprise. B . workers, managers, and entrepreneurs could not personally profit by responding to dearths or surpluses or by introducing new and improved products. C. the immediate effect of more investment was less consumption. D. exports had to be equal to imports for a central plan to work.73. Suppose that an individual sees a tremendous opportunity to produce and sell a new product, but dismisses the idea because there is no way to exploit this opportunity for personal gain. This situation best identifies the A. coordination problem under communist central planning. B. self-sufficiency dilemma under communism. C. asymmetric information problem under communism. D. incentive problem under communist central planning.74. Innovation lagged in the centrally planned economies because A. there was too much domestic business competition. B. there was too much competition from foreign fir ms. C. enterprises resisted innovation in fear that their production targets would be raised. D. exports had to equal imports for the plan to work.75. The fact that the major indicator of enterprise success in the Soviet Union and pre-reform China was the quantity of output implied that A. product quality was neglected. B. production costs were minimized. C. product-mix met consumer needs. D. technological advance was too rapid.76. try managers and workers in the Soviet Union often resisted innovations in production methods because A. production targets were often increased when innovation occurred. B. there was a chronic shortage of computers. C. workers could not be reallocated geographically. D. innovations ordinarily increased dependence on terra firma markets.77. If products were in short or surplus supply in the Soviet Union A. price and profit signals eliminated those shortages and surpluses. B. price and profit signals intensified those shortages and surpluses. C. producer s would not react because no price or profit signals occurred. D. the planners would immediately lay out production to achieve equilibrium.78. In what type of business do the owners pay no personal financial responsibility for the communitys debts and obligations? A. Partnerships. B. Corporations. C. Sole proprietorships. D. In all of the businesses listed in the other answers.79. The simple circular flow model shows that A. households are on the buy side of both product and resource markets. B. businesses are on the selling side of both product and resource markets. C. households are on the selling side of the resource market and on the buying side of the product market. D. businesses are on the buying side of the product market and on the selling side of the resource market.80. The two staple fibre markets shown by the simple circular flow model are A. capital goods and consumer goods. B. free and controlled. C. product and resource. D. household and business.81. In the resou rce market A. businesses imbibe financial capital from households. B. businesses sell services to households. C. households sell resources to businesses. D. firms sell raw materials to households.82. In the simple circular flow model A. households are buyers of resources. B. businesses are sellers of final products. C. households are sellers of final products. D. there are real flows of goods, services, and resources, but not money flows.83. Refer to the above diagram. Flow (1) represents A. wage, rent, interest, and profit income. B. land, labor, capital, and entrepreneurial ability. C. goods and services. D. consumer expenditures.84. Refer to the above diagram. Flow (2) represents A. wage, rent, interest, and profit income. B. land, labor, capital, and entrepreneurial ability. C. goods and services. D. consumer expenditures.85. Refer to the above diagram. Flow (3) represents A. wage, rent, interest, and profit income. B. land, labor, capital, and entrepreneurial ability. C. goods and services. D. consumer expenditures.86. Refer to the above diagram. Flow (4) represents A. wage, rent, interest, and profit income. B. land, labor, capital, and entrepreneurial ability. C. oods and services. D. consumer expenditures.87. In terms of the circular flow diagram, households make expenditures in the _____ market and receive income through the _____ market. A. product financial B. resource product C. product resource D. capital product88. In terms of the circular flow diagram, businesses obtain revenue through the _____ market and make expenditures in the _____ market. A. product financial B. resource product C. product resource D. capital product89. Households and businesses are A. both buyers in the resource market. B. both sellers in the product market. C. ellers in the resource and product markets respectively. D. sellers in the product and resource markets respectively.90. Refer to the above diagram. Arrows (1) and (2) represent A. goods and resources respectively . B. money incomes and output respectively. C. output and money incomes respectively. D. resources and goods respectively.91. Refer to the above diagram. Arrows (3) and (4) represent A. goods and services respectively. B. incomes and consumer expenditures respectively. C. resources and goods respectively. D. consumer expenditures and income respectively.92. Refer to the above diagram. Arrows (1) and (3) are associated with A. the money market. B. the resource market. C. the product market. D. international trade.93. Which of the following best illustrates the circular flow model in action? A. Bobbie goes to work and builds cars, and uses the income she receives to buy aliment at the grocery store. B. Evan buys a new couch the owner of the piece of furniture store uses some of the money from the sale to pay her supplier, and uses the rest to take her family out to dinner. C. Boeing experiences a surge in orders for new airplanes, prompting the company to hire more workers. D. All o f these answers illustrate the workings of the circular flow model.94. (Consider This) In 1975, McDonalds introduced its Egg McMuffin breakfast sandwich, which remains popular and profitable today. This seniority illustrates the idea of A. opportunity cost. B. upsloping supply. C. consumer sovereignty. D. specialization.95. (Consider This) In 2000, McDonalds introduced its McSalad Shaker, which failed to catch on with the public and was later on dropped from the menu. This failure illustrates the idea of A. consumer sovereignty. B. technological change. C. downsloping demand. D. specialization.96. (Consider This) Since World War II A. North Koreas command economy has significantly outperformed South Koreas market economy. B. South Koreas command economy has significantly outperformed North Koreas market economy. C. North Koreas market economy has significantly outperformed South Koreas command economy. D. South Koreas market economy has significantly outperformed North Koreas com mand economy.97. (Consider This) North Koreas command economy A. is one of the few remaining command economies. B. has grown much faster than South Korea since the two countries were divided after World War II. C. produces a per capita GDP of nearly $25,000. D. has undergone significant market reforms and is now one of the fastest growing economies.98. (Last Word) agree to economist Donald Boudreaux, the worlds tens of billions of individual resources get arranged productively A. because government has cause highly effective at central planning. B. because private property encourages people to consider the alternative uses of their resources and select those that provide the most rewards. C. because people tend to be creative and orderly. D. through random trial and error.99. Last Word) check to economist Donald Boudreaux A. private property eliminates the possibility that resource arrangements will be random. B. the market system threatens to do irreparable harm to the worlds ec osystem. C. arranging resources under the market system is much like shuffling a take aback of cards. D. the market system works wondrously for advanced industrial nations but not for developing nations.100. Market economies use capital goods because they improve productive efficiency. square bastard101. Money functions as a medium of exchange by eliminating the need for a coincidence of wants. dead on target fake102. Consumer sovereignty means that legislation now protects the rights of consumers to dispose of their incomes as they see fit. True False103. Specialization may expand total output even though the individuals involved may have identical abilities. True False104. The wants of consumers are expressed in the product market with dollar votes. True False105. Costs can be defined as total payments made to workers, land owners, and capital suppliers less payments to the entrepreneur for organizing and combining the other resources used to produce a good. True False106. C ontinued losses in an industry will cause some firms to reduce output or eventually leave the industry. True False107. The guiding function of prices tends to keep resources flowing toward their most highly valued uses. True False108. The invisible hand refers to the many indirect controls that the Federal government imposes in a market system. True False109. Central planning in the Soviet Union and pre-reform China emphasized the expansion of the production of consumer goods to raise the domestic standard of living. True False110. Central planning often suffers from a coordination problem and an incentive problem. True False ch02 Key1. B2. C3. D4. A5. B6. B7. C8. A9. D10. A11. C12. A13. B14. C15. C16. C17. B8. B19. C20. A21. D22. B23. A24. A25. C26. C27. A28. D29. B30. C31. D32. C33. D34. D35. B36. B37. D38. A39. C40. B41. B42. D43. B44. B45. C46. B47. A48. B49. D50. B51. B52. A53. D54. A55. B56. D57. A58. C59. B60. A61. D62. A63. B64. D65. A66. B67. C68. A69. A70. B71. D72. B73. D 74. C75. A76. A77. C78. B79. C80. C81. C82. B83. A84. B85. C86. D87. C88. C89. C90. D91. B92. B93. D94. C95. A96. D97. A98. B99. A100. TRUE101. TRUE102. FALSE103. TRUE104. TRUE105. FALSE106. TRUE107. TRUE108. FALSE109. FALSE110. TRUE ch02Summary socio-economic class of Questions AACSB Analytic 72 AACSB Reflective Thinking 38 Blooms train 1 Remember 36 Blooms Level 2 Understand 51 Blooms Level 3 Apply 18 Blooms Level 4 Analyze 5 Difficulty 1 Easy 36 Difficulty 2 median(a) 69 Difficulty 3 Hard 5 Learning fair game 02-01 Differentiate between a command system and a market system. 3 Learning Objective 02-02 List the main characteristics of the market system. 25 Learning Objective 02- 03 Explain how the market system decides what to produce how to produce it and who obtains it. 40 Learning Objective 02-04 Discuss how the market system adjusts to change and promotes progress. 14 Learning Objective 02-05 Describe the mechanics of the circular flow model. 16 McConnell Chapter 02 115 consequence Characteristics of the market system 25 Topic Circular flow model 16 Topic Demise of the command systems 13 Topic Economic systems 10 Topic Five fundamental questions 38 Topic Invisible hand 8