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MOUNT SAINT VINCENT UNIVERSITY HALIFAX, NOVA SCOTIA ECON 1101 Prof. T. Bislimi ASSIGNMENT #2 WINTER 2012

Multiple Choice Questions Identify the choice that best completes the statement or answers the question. 1. Three economic questions must be determined in all societies. What are they? a. How much will be produced? When will it be produced? How much will it cost? b. What will the price of each good be? Who will produce each good? Who will consume each good? c. What is the opportunity cost of production? Does the society have a comparative advantage in production? Will consumers desire the goods being produced? d. What goods will be produced? How will goods be produced? From whom will goods be produced? When a command economy is utilized to resolve economic questions regarding the allocation of resources, then: a. everyone will receive an equal share of the output produced. b. the preferences of individuals are of no importance. c. economic efficiency will be assured. d. the role of markets will be replaced by political decision making. Which of the following best distinguishes a “command economy” from a “market economy”? a. A command economy is more efficient than a market economy because decision making is centralized. b. There is scarcity in command economies, but not in market economies. c. Command economies are less prone to inflation than are market economies. d. Production and distribution decisions are made by central planners in a command economy, but not in a market economy. Which of the following best characterizes the circular flow of income? a. Households buy factors of production from businesses, and businesses buy goods and services from households. b. The government purchases resources from businesses and households and then sells goods and services to businesses and households. c. Businesses buy resources from the government, and households buy goods and services from businesses. d. Businesses buy resources from households, and households use...