Chapter 1

The five fundamental questions reflect the reality of _____ resources in a world of _____ wants.

scarce, unlimited

The focus of __ economics is facts and cause-and-effect relationships, including things like theory testing and descriptions.

positive

The main problems facing central planners operating command systems included__.

the fact that, without the profit motive, there was no reliable success indicator for industries, the fact that, in many cases, outputs from one industry served as the inputs for another industry

The major reasons for the collapse of the command system in countries like the Soviet Union were __. 

lack of coordination

The major role players in an economic system are __.

the government, business enterprises, households, the foreign sector

The major role players in any economic system are households, business enterprise, the _____ and the _____ sector.

government, foreign

The market system acknowledges rands voting for _____ goods as well as for _____ goods.

capital, consumer

The market system requires that various economic units make choices. These are expressed in the markets through freedom of _____ and freedom of _____.

enterprise, choice

The most efficient production technique depends on the available technology as well as __.

the price of the needed resources

The most pressing reason for societies to develop economic systems is__.

to respond to the problem of scarcity

The notion that economic resources, goods and services are limited is known as __.

scarcity

True or false: Economic models simplify reality so much that they have little to no value.

False

True or false: Positive economics encourages value judgments.

False

True or false: Positive economics incorporates value judgements concerning what the economy should be like or what particular policy actions ought be recommended to achieve a desirable goal.

False

True or false: When you are revising for your economics exam, you typically have a choice about whether to revise for another half hour or watch television. This is not a decision about revising all of the time or watching television all of the time but one about marginal changes.

True

True or false? Only market economies need to address the fundamental five questions.

False

Under a command system, businesses produce according to__.

government directives

Under a command system, production goals and the division of output are decided__.

by the central planning board

What do we call a statement about economic behaviour that enables prediction of the probable effects of certain actions?

An economic theory, An economic principle

What is the main reason that people are driven to make choices in day-to-day life?

Scarcity