B) always consider the impact of their actions on the welfare of others.

04 Jun B) always consider the impact of their actions on the welfare of others.

Question
1) An economic system is

A) the universe of all resources.

B) a way to create new resources.

C) a mechanism to allocate scarce resources.

D) an organization that generates profits.

2) The way that a society uses to allocate resources to satisfy human wants is called

A) an economic system.

B) an assumption.

C) realism.

D) a physical science.

3) The issues that an economic system attempts to solve include:

A) what to produce.

B) how to produce items.

C) for whom items are produced.

D) all of the above.

4) Which of the following is NOT one of the basic questions that an economic system attempts to answer?

A) How to eliminate choices?

B) What to produce?

C) How much will goods and services be produced?

D) For whom will goods and services be produced?

5) What is the type of economic system that relies on one central authority to make economic decisions?

A) Free market

B) Price system

C) Command and control

D) Mixed economic system

6) What is the type of mechanism that answers the basic economic questions through a decentralized decision making process?

A) Market system

B) Dictatorship

C) Command and control

D) Mixed economic system

7) Central planning is a key characteristic of which economic system?

A) Free market

B) Price system

C) Command and control

D) Mixed economic system

8) Under a pure price system, the decision of resource allocation is made by

A) the head of the government.

B) a queen or king.

C) individuals who own the resources.

D) no one.

9) In a market system, the what, how and for whom questions in economics are determined by

A) those who are not in the market.

B) buyers and sellers together.

C) the central authority.

D) no one.

10) In a market system, ________ provide signals about whether resources are relatively scarce or abundant.

A) prices

B) economists

C) government officials

D) scientists and engineers

11) The United States is best known as a

A) pure price system.

B) dictatorship.

C) command and control system.

D) mixed economic system.

12) A mixed economic system is best described an economy with a mix of

A) state and federal governments.

B) domestic and foreign buyers.

C) free markets and government control.

D) for-profit organizations and not-for-profit organizations.

13) Distinguish between a command-and-control economic system and a price system.

1.4 The Economic Approach: Systematic Decisions

1) In his book, An Inquiry into the Nature and Causes of the Wealth of Nations, economist Adam Smith argued that individuals

A) always tend to act in an altruistic manner.

B) always consider the impact of their actions on the welfare of others.

C) are motivated by self-interest.

D) are generally not concerned with economic questions.

2) Economists assume that people are motivated by

A) benevolence.

B) altruism.

C) greed.

D) rational self-interest.

3) One major assumption of economics is that people

A) act as if they systematically pursue self-interest.

B) behave randomly without any predictable pattern.

C) are sometimes rational and sometimes irrational.

D) always pursue the interests of others.

4) If people act as if they systematically pursue their own self-interest, then they will most likely

A) respond irrationally to any incentive.

B) respond to a given incentive in a random manner.

C) respond predictably to a given incentive.

D) not respond to any incentive.

5) When studying individuals’ economic behavior, economists assume that

A) individuals understand the rationale for all their actions.

B) individuals act as if they were rational.

C) only educated people act as if they were rational.

D) self-interest is of limited relevance in predicting an individual’s actions.

6) The assumption that people do not intentionally make decisions that would leave them worse off is known as

A) the rationality assumption.

B) the microeconomic assumption.

C) the ceteris paribus assumption.

D) the normative assumption.

7) When the text refers to rational self-interest, it means

A) your looking out for what is best for you as an individual.

B) your focus on your own contributions to society.

C) behavior that makes society better off.

D) behavior that helps your employer earn higher profits.