1. Adam Smith believed people are guided by all of the following except ________

Question

1. Adam Smith believed people are guided by all of the following except ___________.

a) the profit motive

b) self-interest

c) the public good

d) the invisible hand

2.The price system is based on ____________________.

a) government regulation (i.e. the government sets most of the prices)

b) the individual whim of the business person who sets the price

c) the feelings of the individual buyer who decides what a fair price is

d) the interaction of the forces of supply and demand

3. In the United States, nearly all resources (factors of production) are owned by ______________.

a) the government

b) business firms

c) individuals/ households

d) foreigners

4. In the circular flow model, wages, rent, interest, and profits flow from _____________________.

a) business firms to households

b) households to business firms

c) business firms to government

d) government to business firms

5. In the circular flow model, land, labor, capital, and entrepreneurial ability flow from

a) business firms to households

b) households to business firms

c) business firms to government

d) government to business firms

Explanation / Answer

1. c the public good 2. d the interaction of the forces of supply and demand 3. a) the government 4. a) business firms to households 5. d) government to business firms

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