Question 1

International trade allows the world to

Accepted Answer

International trade allows countries to specialize in the production of goods or services in which they have a comparative advantage, and import other goods or services that they are less efficient at producing. This allows a country to produce more goods than they could if they were producing everything themselves, and move towards the curve of their global production possibilities. Therefore, international trade allows countries to move from inside the global production possibilities curve towards the curve.

Question 2

A pure capitalist economy would be

Accepted Answer

Pure capitalism is a system where all resources are owned and controlled by private individuals and firms, without interference from the government. This means that all property, including land, natural resources, and means of production, are owned and operated by individuals and firms for their own benefit.

Question 3

A mixed economy is one in which decisions about how resources are used

Accepted Answer

In a mixed economy, decisions about how resources are used are made partly by the private sector and partly by the public sector. The private sector includes individuals and businesses, while the public sector is made up of government entities. This means that there is a combination of market forces and government intervention in the economic system, allowing for both competition and regulation.

Question 4

A price system is an economic system in which

Accepted Answer

A price system is characterized by prices that change based on the interaction of supply and demand in the market. This allows for resources to be allocated efficiently based on the preferences of buyers and sellers, without the need for central planning or government intervention in setting prices.

Question 5

An economic system in which individuals own productive resources,and those individuals can use the resources in whatever manner they choose,subject to common protective legal rules,is known as ________.

Accepted Answer

The answer of An economic system in which individuals own...

Question 6

If a person can earn $70,000 as an accountant,$60,000 as a chef,$20,000 as a mechanic,and nothing as an opera singer,he or she has a comparative advantage in

Accepted Answer

The concept of comparative advantage states that a person or country should specialize in producing the good or service in which they have a lower opportunity cost. Opportunity cost is the value of the next best alternative that must be given up in order to pursue a certain action. In this case, the person can earn the most as an accountant ($70,000) compared to the other occupations. Therefore, they have a comparative advantage in accounting.

Question 7

Another name for a capitalist economy is a

Accepted Answer

A capitalist economy is also known as a market economy, where the production and distribution of goods and services are mostly guided by the free market and pricing mechanisms. It is different from a socialist economy, which emphasizes collective ownership of the means of production, and from communist and fascist economies, which are characterized by centralized government control over the economy.

Question 8

The division of labour refers to

Accepted Answer

The division of labour refers to the assignment of different workers to different tasks. This can lead to increased efficiency and productivity as each worker can focus on a specific task and become more skilled and experienced in that area.

Question 9

In pure market capitalism,the movement of resources would

Accepted Answer

In pure market capitalism, resources move based on the lure of profits. The government has minimal intervention in the market, and labor unions do not direct the movement of resources. Therefore, the movement of resources is driven by the pursuit of profit in a competitive market.

Question 10

The circular flow diagram shows that

Accepted Answer

The circular flow diagram illustrates the interaction between households and businesses in determining what goods and services get produced. Consumers (households) demand goods and services, which firms produce and sell to them. This interaction shapes the market, the prices of goods and services, and ultimately the allocation of resources in the economy. Therefore, both consumers and firms are equally important in determining what goods and services get produced.

Question 11

Which of the following is NOT one of the three basic economic questions?

Accepted Answer

The three basic economic questions are what to produce, how to produce, and for whom to produce. The question of what prices to charge is not a basic economic question, but rather a decision that is informed by the answers to the three basic questions.

Question 12

One distinguishing feature between capitalist countries and non-capitalist countries is that

Accepted Answer

Private property rights are a fundamental aspect of capitalism, where individuals are free to own, control, and use property, while non-capitalist countries typically have state or communal ownership of resources.

Question 13

Division of labour raises the output of society by

Accepted Answer

Division of labour allows resources to specialize in the tasks for which they have a comparative advantage. When individuals or resources concentrate on producing the goods or services they can produce most efficiently, the overall output of society increases. This is because resources are not wasted on producing goods that they are not good at producing, which can lead to inefficiencies and lower overall output.

Question 14

What are the three basic economic questions in every country?

Accepted Answer

The answer of What are the three basic economic questions...

Question 15

When nations begin to specialize in their areas of comparative advantage and then trade with the rest of the world,the result is that

Accepted Answer

Specialization and trade based on comparative advantage generally increase the average standard of living by allowing more efficient production and consumption. However, some producers may be worse off due to increased competition.

Question 16

A mixed system is an economic system in which

Accepted Answer

In a mixed economic system, both private businesses and the government play a role in determining economic outcomes. The private sector is allowed to operate and make profits, but there can be government intervention in areas such as taxation, regulation, and public services. Therefore, decisions about resource use are made partly by the private sector and partly by the public sector. Scarcity is still present, but it is not controlled solely through rationing or government ownership of resources.

Question 17

With resource specialization,

Accepted Answer

Resource specialization allows individuals and businesses to focus on their core competencies, leading to increased efficiency and productivity. This, in turn, results in higher material well-being for society as a whole.

Question 18

The Canadian economy is an example of

Accepted Answer

The Canadian economy is a mixed economy because it combines features of both a command economy (government intervention in some sectors) and a market economy (free market forces in other sectors). The Canadian government regulates industries such as banking, telecommunications, and transportation, while also allowing private enterprise to operate freely in other areas.

Question 19

"The institutional means by which scarce resources are used to satisfy human wants" is the definition of

Accepted Answer

The definition provided in the question refers specifically to an economic system, which is how a society organizes the distribution and use of resources to meet people's needs and wants. A system of property rights is one element of an economic system, but not the definition of the system as a whole. A social system is a broader term that encompasses all aspects of society, including economic, political, and cultural dimensions. An educational system is even more specific, referring only to the means by which knowledge and skills are transmitted to individuals.

Question 20

The idea of comparative advantage is based directly on

Accepted Answer

The concept of comparative advantage is based directly on the idea of opportunity cost, which refers to the value of the next best alternative that must be given up in order to pursue a certain action. In this case, comparative advantage suggests that countries should specialize in producing goods and services which they can produce at a lower opportunity cost than other countries, and trade with each other to maximize overall efficiency and benefits.

Quiz 2: Production Possibilities and Economic Systems