?Which of the following is a characteristic of a pure command economy?
a. all resources are privately owned
b. economic activity is coordinated by the price system
c. competitive markets guide resources to their highest-valued uses
d. centralized economic planning is used to answer the basic economic questions
e. economic choices are voluntary and are based on rational self-interest
Ans: d. centralized economic planning is used to answer the basic economic questions
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When a nation starts importing a good or service, domestic employment in that industry
A) decreases. B) stays the same. C) increases. D) might change, but more information about what else the country imports is needed to determine if employment increases, decreases, or does not change. E) might change, but more information about what the country exports is needed to determine if employment increases, decreases, or does not change.
Standard economic theory asserts that sunk costs are irrelevant in making economic decisions, yet studies conducted by behavioral economists reveal that sunk costs often affect economic decisions. Which of the following could explain this observation?
A) Even though sunk costs cannot be recovered, it has been incurred and therefore should be treated as part of the product's value. B) People measure the value of a good in terms of its purchase price. C) Sunk costs have a higher opportunity cost than costs that can be recovered. D) If consumers maximize their utility, it makes sense to consider the full purchase price of a product in their consumption decisions.
Governments may intervene in markets to:
A. reduce consumption certain products deemed "bad". B. correct a market failure. C. increase the efficiency of the market. D. all of the above are reasons why governments intervene in market.
To pursue higher rates of economic growth only when the advantages of the policy outweigh the sacrifices that must be made is an example of the:
A. principle of comparative advantage B. principle of increasing opportunity costs C. scarcity principle D. cost-benefit principle