_______ ensure that resources are allocated to where they are most highly valued.

_______ ensure that resources are allocated to where they are most highly valued.
 a. Communist governments
  b. Consumers
  c. Suppliers
  d. Non-governmental organizations
  e. Markets

Question 2

An increase in production of one good will have zero opportunity cost only if the economy initially existed at a point inside the production possibilities curve.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 3

What is the relationship between savings, capital formation, and consumption?

Question 4

Which of the following statements is not true about a market system?
 a. The market system provides an incentive to consumers to acquire purchasing ability.
  b. The market system magnifies the problem of scarcity of goods and services.
  c. The market system provides an incentive for allocating resources.
  d. The market system provides an incentive to improve the quality of goods produced.
  e. The market system provides everything everyone wants to consume.

Question 5

In a market economy, prices help determine the distribution of goods and services but not the allocation of resources.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 6

Does the political freedom existing in democracies always aid economic growth?

Question 7

Given that resources can be allocated by the government, the market, a random process, or on a first-come first-serve basis, which of the following statements is true?
 a. The market system is not entirely fair but it creates incentives to increase supplies and improve standards of living.
  b. The random process of allocation allows individuals to acquire purchasing power and enhances the value of the resources that they own.
  c. Since the government system does not distinguish between those who have income and those that do not, government allocation of resources is the most efficient.
  d. There will be no shortages under the first-come first-serve basis of allocation.
  e. A random process of allocation is fair in the sense that everyone gains and there are no losers.

Question 8

Consumer sovereignty means that consumers vote with their dollars in a market economy, which helps determine what is produced.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 9

Why is China still poor in per capita terms despite having the second-largest economy in the world in terms of real GDP?

Question 10

Specialization according to comparative advantage followed by free trade makes every economy better off.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 11

In a market economy, government officials make most production decisions in a centralized manner.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 12

What were the negative results predicted by Malthus' and how can we avoid such results?