6. Specialization in production is economically beneficial primarily because it:

Question

6. Specialization in production is economically beneficial primarily because it:
A. allows everyone to have a job that he or she likes.
B. permits the production of a larger output with fixed amounts of resources.
C. facilitates trade by bartering.
D. guarantees full employment.

7. Innovation lagged in the centrally planned economies because:
A. there was too much domestic business competition.
B. there was too much competition from foreign firms.
C. enterprises resisted innovation in fear that their production targets would be raised.
D. exports had to equal imports for the plan to work.

9. A market system tends to restrict business risk to owners and investors. This results in which of the following benefits?
A. It encourages more people to become entrepreneurs.
B. Firms have to pay more to attract inputs, as these inputs have to share the risk.
C. Firms focus attention on prudent risk management, as it is profitable to manage risk.
D. Income becomes more equally distributed.

Explanation / Answer

Specialization in production is economically beneficial primarily because it-

B. permits the production of a larger output with fixed amounts of resources.

Explanation- Using fixed amount of resources if the economy is skilled in producing any paticular product that brings huge production with perfection.For example suppose a baggage producer is skilled in market though he is using same resources but he is specialised on that particular bag production.

7. Innovation lagged in the centrally planned economies because-

C. enterprises resisted innovation in fear that their production targets would be raised.

8.Refer to the diagram. Flow 1 represents:-

A. wage, rent, interest, and profit income.

9.A market system tends to restrict business risk to owners and investors. This results in which of the following benefits-

C. Firms focus attention on prudent risk management, as it is profitable to manage risk.

Explanation-Market systems manage risk better because entrepreneurs taking risks bear the cost of poor decisions, where in command systems government decisionmakers don't bear those cost.

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