Which of the following describes a firm?
a. Purchases labor hours from workers
b. Borrows capital from investors
c. Combines labor and capital to create production, moving them from their low value use to high value use
d. All of the above
QUESTION 2An advantage of capitalism is that
a. It allows the market to self-regulate and clear itself
b. It allows a person to follow his or her own self interest
c. It allows voluntary transactions, which create wealth
d. All of the above
QUESTION 3A creative entrepreneur is one who knows how to
a. Run a business
b. Escape the burden of taxes
c. Profitably exploit money making opportunities
d. All of the above
QUESTION 4Wealth is created when
a. Assets move from lower value use to higher value use
b. Assets move from higher value use to lower value use
c. Assets move from individuals who are willing to pay less for them to individuals who are willing to pay more for them
d. Both A and C
QUESTION 5If you are willing to sell your lawn mower business for 355,000 and someone offers you 420,000 for it, this transaction will generate:
a. There is no surplus created
b. 65,000 worth of seller surplus and unknown amount of buyer surplus
c. 30,000 worth of buyer surplus and 35,000 of seller surplus
d. 65,000 worth of buyer surplus and unknown amount of seller surplus
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