Question 1

In 18th century Europe,governments gave guilds legal authority to limit production of goods.Did this authority obstruct or improve the market mechanism and how?

Accepted Answer

By giving guilds legal authority to limit production, the government effectively restricted the ability of producers to respond to market signals such as changes in demand or fluctuations in prices. The guilds could prevent new entrants from entering a market and limit the competition among existing members. This obstructed the market mechanism by preventing market forces from coordinating the decisions of producers and consumers.

Question 2

A major factor contributing to the slow growth rate of less developed economies is

Accepted Answer

The lack of well-defined and enforceable property rights hinders investment and growth in less developed economies as it discourages people from investing in capital goods, infrastructure, and technology due to uncertainty and risk of potential expropriation. This leads to slower economic growth and development. The other options (lack of natural resources, lack of workers, and high rate of illiteracy) may also contribute but are generally not considered as major factors slowing down growth in less developed economies.

Question 3

When you purchase a new set of spurs you do so in the

Accepted Answer

When purchasing a new set of spurs, you are buying a finished product in the product market. The resource market refers to the market for factors of production (land, labor, capital, and entrepreneurship) that are used to produce goods and services. The input market refers to the market for intermediate goods that are used to produce other goods. The factor market specifically refers to the market where factors of production are bought and sold. Therefore, the best choice for purchasing spurs is in the product market (B).

Question 4

Stricter laws and regulations to protect intellectual property rights

Accepted Answer

Stricter laws and regulations to protect intellectual property rights will help to create a more successful market system by providing incentives for innovation and creativity. This, in turn, can lead to increased competition and economic growth. Strong intellectual property protection can also benefit small businesses and individuals who rely on their ideas and inventions to compete in the marketplace.

Question 5

All of the following countries come close to the free market benchmark except

Accepted Answer

North Korea is a centrally-planned economy with very limited private enterprise and government control over most aspects of the economy. Canada, Germany, and Singapore, while not perfectly free market economies, have relatively high levels of economic freedom and market-oriented policies.

Question 6

Refer to the Article Summary.If more developing countries began abiding by international agreements which protect intellectual property rights,all of the following would most likely occur except

Accepted Answer

The article summary does not suggest that fewer dollars would be spent on the development of new medicines if more developing countries began abiding by international agreements which protect intellectual property rights. In fact, it suggests that pharmaceutical companies would increase investment in the development of more experimental drugs and consider expanding operations to these developing countries, which could lead to more patents being issued to pharmaceutical companies.

Question 7

All of the following are critical functions of the government in facilitating the operation of a market economy except

Accepted Answer

Ensuring an equal distribution of income to all citizens is not a critical function of the government in facilitating the operation of a market economy. The market economy is based on the principle of voluntary exchange, which means that individuals are free to engage in transactions voluntarily without interference from the government. The government's role is to provide a legal framework in which individuals can operate and enforce the rules of the game, including protecting private property, enforcing property rights, and enforcing contracts. However, the government should not interfere in the market process by redistributing income or wealth.

Question 8

Which of the following is an examples of spending on factors of production in the circular flow model?

Accepted Answer

The "Suds Bucket" car wash buying new squeegees for its employees is an example of spending on factors of production, specifically capital goods, which are used to produce other goods and services. Option A is an example of spending on a final good (beef jerky), option B is an example of spending on a service (manicure and pedicure), and option C is an example of spending on a leisure activity (water park pass).

Question 9

A successful market economy requires

Accepted Answer

Well-defined property rights and an independent court system to adjudicate disputes based on the law are essential for a successful market economy. This allows for a fair and efficient allocation of resources and encourages investment and innovation. Government-controlled banking systems and price controls can lead to distortions and inefficiencies, while generous social benefits and limits on immigration may discourage productive labor market participation. An equitable distribution of income is desirable from a social perspective but is not a requirement for a successful market economy.

Question 10

The primary purpose of ________ is to encourage the expenditure of funds on research and development to create new products.

Accepted Answer

Patents and copyrights provide legal protection for innovative ideas and products, encouraging companies to invest in research and development with the promise of exclusive rights to their creations. This incentivizes the creation of new products and drives technological advancement.

Question 11

An example of a factor of production is

Accepted Answer

A factor of production is a resource used in the production of goods and services. In this case, a vintner hired by a vineyard is an example of a factor of production as they are directly involved in the production process of wine. The other choices are either end products or financial resources not directly involved in the production process.

Question 12

Adam Smith's invisible hand refers to

Accepted Answer

Adam Smith's invisible hand refers to the idea that individuals, in pursuing their own self-interest, unintentionally promote the good of society as a whole. This happens through the market mechanism, where prices and production decisions are influenced by supply and demand. The invisible hand is the idea that the market will naturally adjust to reach an equilibrium that benefits society as a whole, without any central planning or intervention.

Question 13

Consider the following items: 
a.the novel "The DaVinci Code" by Dan Brown
b.the "The Spirited Shipper," an innovative wine shipping box
c.a Swiss chef's award-winning recipe
d.an original fabric design,for example,the fabric used for "Coach" bags and luggage
Which of the items listed is an example of intellectual property?

Accepted Answer

The answer of Consider the following items: 
a.the novel "The...

Question 14

Consider the following items: 
a.the album "21" by Adele
b.a Dutch horticulturalist's new method for cultivating hybrid tulips
c.Rolls Royce's "Spirit of Ecstasy" hood ornament design
d.the sale of Tumi luggage at a Macy's department store
Which of the items listed is an example of intellectual property?

Accepted Answer

Intellectual property refers to creations of the mind that have commercial value, such as inventions, literary and artistic works, and symbols and designs. The album "21" by Adele is an example of copyrighted literary and artistic work, the Dutch horticulturalist's new method for cultivating hybrid tulips is an example of patented invention, and Rolls Royce's "Spirit of Ecstasy" hood ornament design is an example of a trademarked symbol and design. Therefore, all three items are examples of intellectual property. The sale of Tumi luggage at a Macy's department store is a transaction of physical goods and does not involve intellectual property.

Question 15

If a nation changes its laws to more actively enforce intellectual property rights,all of the following will most likely take place except

Accepted Answer

If a country enforces intellectual property laws, then the black market for intellectual property should decrease (not increase as stated in option C). Option A, B, and D are all likely results of more active enforcement of intellectual property rights.

Question 16

The term "property rights" refers to

Accepted Answer

Property rights refer to the ability of an individual or business to exercise control over their own resources, including physical possessions and intellectual property, within the confines of the law. It involves the right to use, transfer, and exclude others from using one's own property.

Question 17

If a brewery wants to raise funds to purchase a new fermenting vat,it does so in the

Accepted Answer

The answer of If a brewery wants to raise funds...

Question 18

All of the following are examples of spending on goods and services in the circular flow model except

Accepted Answer

The answer of All of the following are examples of...

Question 19

An organization of producers that limits the amount of a good produced is known as a

Accepted Answer

A guild is an organization that limits the amount of goods produced by its members in order to maintain higher prices and quality standards. This is typically done in order to protect the interests of its members and ensure that their goods are not undervalued in the market. A free market organization, on the other hand, would typically advocate for a more open and competitive market with little to no regulation or intervention. A collective and co-op are both organizations that are focused on promoting cooperation and community among members, but do not necessarily limit production in the same way as a guild.

Question 20

Which of the following is a factor of production?

Accepted Answer

The security guard at the local bank is a factor of production because they are involved in providing a service (security) that helps to facilitate the production of goods and services. The other options (a necklace, shares of stock, and casino chips) are not factors of production as they do not contribute to the process of producing goods and services.

Quiz 2: Trade-Offs, comparative Advantage, and the Market System