Chapter 5

Question 1

Command system

Answer 1

Allocates resources by the order of someone in authority

Question 2

Majority rule

Answer 2

Allocates resources in the way the majority of voters choose

Question 3

Contest

Answer 3

Allocation of resources to a winner

Question 4

First-come, First-served

Answer 4

Allocation of resources to those who are first in line

Question 5

Lottery

Answer 5

Allocation to those with the winning number, or any game based on luck

Question 6

Personal Characteristics

Answer 6

Allocation of resources to those who has the ‘right’ Characteristics

Question 7

Force

Answer 7

Use of pressure of some form of force to allocate resources

Question 8

Value

Answer 8

The measure of the maximum price that a person is willing to pay

Question 9

Consumer surplus

Answer 9

The excess benefit received from a good over the amount paid for it

Question 10

Cost

Answer 10

What the producer gives up

Question 11

Price

Answer 11

What the producer recieves

Question 12

Marginal cost

Answer 12

The minimum price that a firm is willing to accept