Economic Systems Review Questions

The economic system of almost all nations can be described as

• Market

• Centrally Directed

• Traditional

• Mixed

In a car manufacturing plant, what is the term for the specialization of tasks where each worker focuses on a specific part of the production process?

• Economies of scale

• Division of labor

• Game theory

• Market failure

Ava runs a bakery and notices that as she increases her production, the cost per loaf of bread decreases. Which economic concept describes this cost advantage due to her scale of operation?

• Economies of scale

• Division of labor

• Tragedy of the Commons

• Circular flow

Abby and Orion run a small business where Abby provides raw materials and Orion manufactures products. What does this scenario illustrate in terms of economic concepts?

• Relationship between households and firms

• Tragedy of the Commons

• Market failure

• Division of labor

Lucas and Sophia are two people competing in a chess tournament. Which theory involves strategic decision making among individuals like Lucas and Sophia?

• Game theory

• Economies of scale

• Division of labor

• Market failure

What is the term for a situation where individuals acting in their own self-interest deplete shared resources?

• Tragedy of the Commons

• Market failure

• Game theory

• Economies of scale

Which type of money is backed by a physical commodity?

• Commodity money

• Fiat money

• Representative money

• Cryptocurrency

Julia and Cal are discussing different types of money. Cal asks, "Where does fiat money get its value?"

• Based on the value of gold

• By government decree

• From the finite amount that will ever be printed

• Because it is fungible

Which of the following is an example of market failure?

• Public Goods and Externalities

• Division of labor

• Economies of scale

• Game theory

In a country where the government controls all the factories and decides what goods should be produced, which economic system is being used?

• Centrally Directed

• Market

• Traditional

• Mixed