Which of the following is true in a command economy?
A
There is more private ownership of the factors of production than in a market economy.
B
Production decisions are based on the incentive of firms to maximize profits.
C
The government directs the use of factors of production.
D
The price system is used to allocate resources.
E
There is more freedom of enterprise than in a market economy.
3
IntermediateSection I: Question 3
The graph below shows the production possibilities curve for a country's economy. The economy is currently producing at point Z. Points M and Z are labeled on the curve.
The graph provided shows the production possibilities curve for a country's economy. The economy is currently producing at point Z. What is the opportunity cost of changing production to point M?
A
3 units of Good Y
B
8 units of Good Y
C
3 units of Good X
D
4 units of Good X
E
2 units of Good X
4
IntermediateSection I: Question 4
The market for Good Z has relatively elastic supply and demand curves. Market efficiency is attained when
A
total labor cost is minimized for each firm
B
each firm experiences economies of scale
C
consumer surplus is greater than producer surplus
D
producer surplus is zero
E
deadweight loss is zero
5
IntermediateSection I: Question 5
Which of the following statements about short-run costs is always true as a firm increases its production?
A
Average fixed cost decreases.
B
Average variable cost decreases.
C
Average total cost decreases.
D
Marginal cost is lower than the average variable cost.
E
Marginal cost is lower than the average total cost.
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