21
The development of money as a medium of exchange has facilitated the expansion of trade because
Answer: Money eliminates the "double coincidence of wants" problem
Questions
22
Money is
Answer: Anything that is generally accepted as a medium of exchange.
23
In a free-market economy the allocation of resources is determined by:
Answer: By consumer preferences
24
A rational person does not act unless:
Answer: The action produces marginal benefits that exceed marginal costs
25
Economics is a science which deals with human wants and their satisfaction.
Answer: Social
26
.....defined economics as a study of mankind in the ordinary business of life.
Answer: Alfred Marshall
27
The growth of an economy is indicated by an
Answer: Increase in national income
30
The problem refers to the possibility that owners and their managers may have different objectives.
Answer: Principal-Agent Problem
31
Economic profit refers to.....minus all relevant costs , both explicit and implicit.
Answer: Revenues
32
The interaction of individuals and firms in a market can be described as a......of money, goods and services and resources through product and factor markets.
Answer: Circular Flow
33
An economic system:
Answer: Is a particular set of institutional arrangements and a coordinating mechanism used to respond to the economizing problem.
36
From society's point of view the economic function of profits and losses is to:
Answer: Reallocate resources from less desired to more desired uses.
37
The invisible hand refers to the:
Answer: Notion that, under competition, decisions motivated by self-interest promote the social interest.
38
The invisible-hand concept suggests that: .
Answer: Assuming competition, private and public interests will coincide
39
Two major virtues of the market system are that it:
Answer: Allocates resources efficiently and allows economic freedom.
40
The simple circular flow model shows that:
Answer: Households are on the selling side of the resource market and on the buying side of the product market.
