McConnell Brue Flynn 19th Edition, Chapter 02 PROBLEMS SOLUTIONS Quiz (2019), Northeast State Community College, Guaranteed A+

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1. Contrast how a market system and a command economy try to cope with economic scarcity. 2. How does self-interest help achieve society’s economic goals? Why is there such a wide variety of desire... d goods and services in a market system? In what way are entrepreneurs and businesses at the helm of the economy but commanded by consumers? 3. Why is private property, and the protection of property rights, so critical to the success of the market system? How do property rights encourage cooperation? 4. What are the advantages of using capital in the production process? What is meant by the term “division of labor”? What are the advantages of specialization in the use of human and material resources? Explain why exchange is the necessary consequence of specialization. 5. What problem does barter entail? Indicate the economic significance of money as a medium of exchange. What is meant by the statement “We want money only to part with it”? 6. Assume that a business firm finds that its profit is greatest when it produces $40 worth of product A. Suppose also that each of the three techniques shown in the table below will produce the desired output: 7. Some large hardware stores such as Home Depot boast of carrying as many as 20,000 different products in each store. What motivated the producers of those individual products to make them and offer them for sale? How did the producers decide on the best combinations of resources to use? Who made those resources available, and why? Who decides whether these particular hardware products should continue to be produced and offered for sale? 8. What is meant by the term “creative destruction”? How does the emergence of MP3 (or iPod) technology relate to this idea? 9. In a sentence, describe the meaning of the phrase “invisible hand.” 10. In market economies, firms rarely worry about the availability of inputs to produce their products, whereas in command economies input availability is a constant concern. Why the difference? 11. Distinguish between the resource market and the product market in the circular flow model. In what way are businesses and households both sellers and buyers in this model? What are the flows in the circular flow model? 12. LAST WORD What explains why millions of economic resources tend to get arranged logically and productively rather than haphazardly and unproductively? [Show More]

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