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Economics > 2.2 Test > Flashcards

2.2 Test Flashcards

1
Q

__________ is the main characteristic of a free market economy

A

Economic freedom

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2
Q

Any arrangement that allows buyers and sellers to exchange things

A

Market

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3
Q

Market allow us to exchange things we _______ for things we _____

A

Have

Want

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4
Q

Markets eliminate the needs for one person to be _________

A

Self sufficient

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5
Q

The concentration of the productive efforts of individuals and businesses on a limited number of activities

A

Specialization

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6
Q

Specialization leads to efficient use of ________, ________, ________

A

Capital
Labor
Land

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7
Q

________ allows people to do their work more efficiently by learning only a few tasks rather than learning many

A

Specialization

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8
Q

________ also benefits businesses by allowing them to by focusing on a specific product or service which allow them to use capital and labor more efficiently

A

Specialization

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9
Q

Free market economy answers the three economic questions

A

What gets made
How it’s made
Who consumes the goods and services

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10
Q

___________ and __________ make their own decisions as to what they will buy and sell

A

Individuals

Businesses

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11
Q

Individuals and privately owned businesses own the ___________

A

Factors of production

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12
Q

The participants in a free market economy are _________ and _______

A

Households

Firms

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13
Q

A person or group of people living in a single residence

A

Household

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14
Q

And organization that uses resources to produce a product or service which it then sells

A

Firms

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15
Q

We can represent exchanges that take place in a free market economy in a diagram called

A

Circular flow model

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16
Q

The arena of exchange in which firms purchase the factors or production

A

Factor market

17
Q

The arena of exchange in which households purchase goods and services from firms

A

Product market

18
Q

Adam Smith published

A

The Wealth of Nations

19
Q

The reward or fear of penalty that encourages people to act in a certain way

A

Incentive

20
Q

The struggle among producers for the dollars of consumers

A

Competition

21
Q

Based on money

A

Monetary

22
Q

Based on prestige and personal satisfaction

A

Non-Monetary

23
Q

_________ and __________ work together to regulate the market

A

Self interest

Competition

24
Q

Without central planning or direction

A

The invisible hand

25
Q

What are the advantages of the free market system

A

Economic efficiency
Economic freedom
Economic growth

Economics (7 decks)

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