CON 260 32. Which of the following statements does NOT apply to a market economy
ID: 1119402 • Letter: C
Question
CON 260 32. Which of the following statements does NOT apply to a market economy? a. Firms decide whom to hire and what to produce b. Households decide which firms to work for and what to buy with their incomes c. Prices act as a "visible hand" to direct economic activities in allocating scarce resources. d. Prices act as an "invisible hand" to direct economic activities in allocating scarce resources. cs, the cost of something is what you give up to get it. For instance, the adage, "There is no such thing as a free lunch," ced, coming to is used to illustrate the principle that people face tradeoffs and associated with opportunity costs. As you have experien college is not a free lunch, what is the opportunity cost of going to college? a. the cost that the parents pay for their children to attend the college. b. the value of the best opportunity that a student gives up to attend college such as working. c. the total spent on food, clothing, books, transportation, tuition, lodging, and other expenses. d. zero, since a college education will allow a student to earn a larger income after graduation. 34. In the simple circular-flow diagram, the participants in the economy are households and firms. In the circular-flow diagram, which of the following items flows from firms to households through the markets of factors of production? a. factors of production such as land, labor, or capital. c. dollars spent on goods and services b. dollars paid to land, labor, and capital d. goods and services 35. The use of theory and observation is more difficult in economics than in sciences such as physics due to the difficulty in conducting a control experiment in an economic system is not easy to conduct. Thus, to refute their theories, economists often gather data from historical episodes of economic change. Which of these statements about economic models is NOT correct? a. For economists, economic models provide insights about the world. b. Economic models are built without assumptions. c. Economic models are often composed of equations and diagrams. d. All of the above are correct. 36. When an economist evaluates a positive statement, he or she is primarily examining evidence. Thus, which of the following is an example of a positive, as opposed to normative, statement? a. When the quantity of money grows rapidly, inflation is a predictable consequence b. Income tax rates should not have been cut as they were a few years ago. c. The quantity of money has grown too slowly in recent years. d. All of the above are positive statements. 37. Suppose the United States has a comparative advantage over Mexico in producing cars. The principle of comparative advantage asserts that b. the United States should refrain altogether from producing cars and import all of what it requires from Mexico, d. Mexico has nothing to gain from importing United States cars the United States should produce a moderate quantity of cars and import the remainder of what it requires from Mexico. the United States should produce more cars than what it requires and export some of it to Mexico.Explanation / Answer
32. Among the given statements, the statement that does not apply to a market economy is the statement that the prices act as a “visible hand” to direct economic activities in allocating scarce resources because price act as invisible hand in market economy and it usually maximize the well being of society in whole.
So, option c i.e Prices act as a “visible hand” to direct economic activities in allocating scarce resources is the answer.
33. So option b is the correct answer i.e the value of the best opportunity that a student gives up to attend college such as working
the opportunity cost of going to college,is the opportunity that a student gives up to attend college such as working, that is like the cost of something is what you give up to get it.
34.In the circular –flow diagram goods and services flows from firms to households through markets of factors of production .
So option d: goods and services is the correct answer
As the other option comes under the purchase of goods and services that actually flows from households to firms through the market of factors of production in the circular flow diagram.
35. Option d i.e all of the above is the answer because all the rest options are correct as Economic models do provide insights about the insights about the world to the economists.For building no assumption is taken and they are composed of equations and diagrams.
36. When an economist evaluates a positive statement, he or she is primarily examining evidence.Thus,which of the following is an example of a positive, as opposed to normative, statement?
So option a is the correct answer i.e when the quantity of money grows rapidly, inflation is a predictable consequence.
Because other option like quantity of money has grown rapidly instead of slowly as in option and also income tax should cut.
37. Suppose the United States has a comparative advantage over Mexico in producing pork. The principle of comparative advantage asserts that
So option c is the correct answer i.e the United States should produce more cars than what it requires and export some of it to Mexico
Because other option like mexico can also gain from importing these cars from United states, and United states should produce more instead of moderate quantity of cars.
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