June P2 Mix
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Questions and Answers

What is the main reason for market failures?

  • Inefficient allocation of resources (correct)
  • Efficient allocation of resources
  • Lack of government intervention
  • Overpopulation

    • What is the primary goal of government intervention in markets?

  • To exacerbate inflation
  • To reduce environmental pollution
  • To promote monopolies
  • To correct inefficiencies and promote equitable distribution of resources (correct)

    • What is a consequence of uneven income distribution?

  • Increased competition
  • Economic growth
  • Environmental protection
  • Social and economic inequalities (correct)

    • What is the purpose of environmental regulations?

    <p>To prevent businesses from causing irreversible environmental damage (C)</p> Signup and view all the answers

    What is the result of inefficiencies in resource allocation?

    <p>Suboptimal position on the PPC (C)</p> Signup and view all the answers

    What is the PPC used to analyze?

    <p>The trade-offs and choices facing economies due to scarce resources (B)</p> Signup and view all the answers

    What is the purpose of central banks in addressing inflation?

    <p>To control inflation (C)</p> Signup and view all the answers

    What do indifference curves help in understanding?

    <p>Consumer preferences and the impact of changes in income or prices (A)</p> Signup and view all the answers

    What is the primary role of prices in a market economy?

    <p>To allocate resources efficiently (C)</p> Signup and view all the answers

    Which of the following is a characteristic of a market?

    <p>Sellers and buyers (C)</p> Signup and view all the answers

    What is the primary difference between a consumer market and a factor market?

    <p>The trade of resources necessary for production (D)</p> Signup and view all the answers

    What is the relationship between price and the quantity demanded according to the Law of Demand?

    <p>Inverse (A)</p> Signup and view all the answers

    What is the primary characteristic of a perfect market?

    <p>All of the above (D)</p> Signup and view all the answers

    What is the primary role of utility in a market?

    <p>Measuring the satisfaction of a consumer (A)</p> Signup and view all the answers

    What is the relationship between price and the quantity supplied according to the Law of Supply?

    <p>Direct (B)</p> Signup and view all the answers

    What is the primary function of an exchange mechanism in a market?

    <p>To facilitate the transfer of goods or services (B)</p> Signup and view all the answers

    What is the primary goal of setting minimum and maximum price levels?

    <p>To ensure producers receive a fair price and consumers can afford essential goods (B)</p> Signup and view all the answers

    What is the main purpose of social safety nets?

    <p>To support individuals who are unable to participate fully in the economy (A)</p> Signup and view all the answers

    What is the primary reason for the state's involvement in production?

    <p>To provide goods and services not adequately provided by the private sector (D)</p> Signup and view all the answers

    What is the Production Possibility Curve (PPC) based on?

    <p>Fixed resources and technology (D)</p> Signup and view all the answers

    What does the shape of the PPC reflect?

    <p>The economy's efficiency and trade-offs (D)</p> Signup and view all the answers

    What is the effect of an outward shift in the PPC?

    <p>Economic growth (A)</p> Signup and view all the answers

    What is the purpose of indifference curves?

    <p>To complement the PPC by showing different combinations of two goods that provide the same level of satisfaction (C)</p> Signup and view all the answers

    What is the primary goal of privatization?

    <p>To increase efficiency and reduce public sector burdens (D)</p> Signup and view all the answers

    What is the primary goal of market equilibrium?

    <p>To maintain a stable market price (A)</p> Signup and view all the answers

    What is the main challenge for governments regarding public sector interventions?

    <p>To balance interventions with the need for economic efficiency and growth (D)</p> Signup and view all the answers

    What determines the prices of goods and services in a market?

    <p>Interactions between buyers and sellers (B)</p> Signup and view all the answers

    What is the effect of price floors and ceilings on the market?

    <p>They distort the natural balance of demand and supply (B)</p> Signup and view all the answers

    What is the primary role of the public sector in the economy?

    <p>To address market failures (B)</p> Signup and view all the answers

    What is the purpose of subsidies to consumers?

    <p>To make essential goods more affordable (B)</p> Signup and view all the answers

    What is the result of a maximum price (price ceiling) set too low?

    <p>Shortage (B)</p> Signup and view all the answers

    What is the primary characteristic of public goods?

    <p>Non-excludable and non-rivalrous (C)</p> Signup and view all the answers

    What is the purpose of indirect taxes?

    <p>To discourage consumption (A)</p> Signup and view all the answers

    What is the result of a minimum price (price floor) set above the market equilibrium?

    <p>Surplus (B)</p> Signup and view all the answers

    What is the primary goal of taxation?

    <p>To fund public services (D)</p> Signup and view all the answers

    What is the purpose of government spending?

    <p>To allocate resources across various sectors (C)</p> Signup and view all the answers

    What is the primary function of a market?

    <p>To facilitate the exchange of goods and services between buyers and sellers (D)</p> Signup and view all the answers

    What measures the satisfaction a consumer derives from a good or service?

    <p>Utility (A)</p> Signup and view all the answers

    What type of market deals with the exchange of finished products?

    <p>Consumer Market (D)</p> Signup and view all the answers

    What is the result of the interaction of supply and demand in a market economy?

    <p>Prices adjust to guide the decisions of producers and consumers (C)</p> Signup and view all the answers

    What is characteristic of imperfect markets?

    <p>One or more conditions of perfect markets are not met (B)</p> Signup and view all the answers

    What is the relationship between price and the quantity demanded?

    <p>Inverse (D)</p> Signup and view all the answers

    What is the function of prices in a market economy?

    <p>To allocate resources efficiently (D)</p> Signup and view all the answers

    What is the primary difference between a market and a factor market?

    <p>Type of goods and services traded (B)</p> Signup and view all the answers

    What is the primary outcome of uneven income distribution?

    <p>Social and economic inequalities (B)</p> Signup and view all the answers

    What is the primary goal of government intervention in addressing pollution?

    <p>To prevent irreversible environmental damage (B)</p> Signup and view all the answers

    What is a consequence of monopolies in a market?

    <p>Potential higher prices (B)</p> Signup and view all the answers

    What is the primary aim of government policies in addressing inefficiencies?

    <p>To move the economy towards the PPC curve (A)</p> Signup and view all the answers

    What is the primary role of indifference curves in economics?

    <p>To understand the impact of changes in income or prices (D)</p> Signup and view all the answers

    What is the primary reason for the existence of market failures?

    <p>The free market fails to allocate resources efficiently (A)</p> Signup and view all the answers

    What is the primary effect of high inflation rates on the economy?

    <p>Erosion of purchasing power (A)</p> Signup and view all the answers

    What is the primary goal of government intervention in addressing income disparities?

    <p>To reduce income disparities (A)</p> Signup and view all the answers

    What is the outcome of market equilibrium?

    <p>Quantity demanded equals quantity supplied (D)</p> Signup and view all the answers

    How do markets allocate resources?

    <p>Based on collective consumer preferences reflected through prices (B)</p> Signup and view all the answers

    What is the primary role of prices in markets?

    <p>To reflect both the cost of production and the value to consumers (D)</p> Signup and view all the answers

    What influences demand and supply in markets?

    <p>Various factors, including economic conditions, consumer preferences, technological changes, and external shocks (B)</p> Signup and view all the answers

    What is the primary goal of public sector intervention in the economy?

    <p>To address market failures, redistribute income, and provide public goods (C)</p> Signup and view all the answers

    What is the purpose of taxation in the public sector?

    <p>To fund public services and allocate resources across various sectors (C)</p> Signup and view all the answers

    What is the purpose of subsidies to producers?

    <p>To support industries crucial for economic stability (D)</p> Signup and view all the answers

    What is the effect of a maximum price (price ceiling) set too low?

    <p>Shortages and black markets (C)</p> Signup and view all the answers

    What is the characteristic of public goods?

    <p>They are non-excludable and non-rivalrous (A)</p> Signup and view all the answers

    What is the purpose of indirect taxes?

    <p>To discourage consumption and raise revenue (A)</p> Signup and view all the answers

    What is the primary purpose of setting minimum and maximum price levels in an economy?

    <p>To protect producers from exploitation and ensure consumers can afford essential goods (D)</p> Signup and view all the answers

    Which of the following is a type of social safety net?

    <p>All of the above (D)</p> Signup and view all the answers

    Why does the state engage in the production of goods and services?

    <p>To provide public goods and services that are not adequately provided by the private sector (A)</p> Signup and view all the answers

    What is the main challenge for governments regarding public sector interventions?

    <p>Balancing interventions with economic efficiency and growth (D)</p> Signup and view all the answers

    What does the Production Possibility Curve (PPC) illustrate?

    <p>The trade-offs and opportunity costs associated with the allocation of limited resources (A)</p> Signup and view all the answers

    What is the effect of an outward shift in the PPC?

    <p>Economic growth (C)</p> Signup and view all the answers

    What is the primary purpose of privatization?

    <p>To improve efficiency and reduce public sector burdens (A)</p> Signup and view all the answers

    What is the relationship between the shape of the PPC and the economy's efficiency?

    <p>The PPC shape reflects the economy's efficiency and the trade-offs between different choices (C)</p> Signup and view all the answers

    What is the primary goal of welfare programs?

    <p>To support individuals who are unable to participate fully in the economy (B)</p> Signup and view all the answers

    What is the effect of price floors and ceilings on the market?

    <p>They distort the natural balance of demand and supply, leading to inefficiencies (A)</p> Signup and view all the answers

    What is a common consequence of high inflation rates in an economy?

    <p>Economic instability and reduced purchasing power (A)</p> Signup and view all the answers

    What is the primary goal of government intervention in regulating monopolies?

    <p>To promote competition and reduce prices (A)</p> Signup and view all the answers

    What is the effect of inefficiencies in resource allocation on the PPC?

    <p>The economy operates inside the PPC curve, indicating inefficient resource allocation (B)</p> Signup and view all the answers

    What is the primary purpose of government policies aimed at addressing income disparities?

    <p>To redistribute income and reduce income disparities (A)</p> Signup and view all the answers

    What is the primary goal of government intervention in markets?

    <p>To correct market failures and promote efficient resource allocation (A)</p> Signup and view all the answers

    What is the primary effect of monopolies on the market?

    <p>Reduced competition and potentially higher prices (B)</p> Signup and view all the answers

    What is the primary role of the PPC in economics?

    <p>To provide insights into the trade-offs and choices facing economies due to scarce resources (A)</p> Signup and view all the answers

    What is the primary goal of government intervention in addressing environmental pollution?

    <p>To regulate businesses and prevent excessive environmental pollution (B)</p> Signup and view all the answers

    What is the primary function of an exchange mechanism in a market?

    <p>To facilitate the transfer of goods or services from sellers to buyers at agreed prices (C)</p> Signup and view all the answers

    Which type of market involves the trade of resources necessary for production?

    <p>Factor market (B)</p> Signup and view all the answers

    What is the primary role of prices in a market economy?

    <p>To serve as signals that help allocate resources efficiently (D)</p> Signup and view all the answers

    What is the characteristic of imperfect markets?

    <p>One or more conditions of perfect markets are not met (D)</p> Signup and view all the answers

    What is the inverse relationship between in a market?

    <p>Price and quantity demanded (B)</p> Signup and view all the answers

    What is the primary goal of a market?

    <p>To facilitate the exchange of goods and services (B)</p> Signup and view all the answers

    What is the result of the interaction of supply and demand in a market economy?

    <p>Prices are determined by supply and demand (C)</p> Signup and view all the answers

    What measures the worth of a good or service in terms of what it can be exchanged for?

    <p>Value (A)</p> Signup and view all the answers

    What is the primary function of prices in a market economy?

    <p>To reflect the value of goods and services to consumers (A)</p> Signup and view all the answers

    What is the primary goal of government intervention in the economy?

    <p>To address market failures and promote social welfare (A)</p> Signup and view all the answers

    What is the effect of a price ceiling set below the market equilibrium?

    <p>A shortage of goods (A)</p> Signup and view all the answers

    What is the primary characteristic of public goods?

    <p>They are non-excludable and non-rivalrous (A)</p> Signup and view all the answers

    What is the purpose of indirect taxes?

    <p>To raise revenue for the government (B)</p> Signup and view all the answers

    What is the primary role of the public sector in the economy?

    <p>To address market failures and promote social welfare (D)</p> Signup and view all the answers

    What is the effect of a subsidy to consumers?

    <p>A decrease in the price of the good (C)</p> Signup and view all the answers

    What is the primary goal of government spending?

    <p>To allocate resources across various sectors (B)</p> Signup and view all the answers

    What is the result of an outward shift in the Production Possibility Curve (PPC)?

    <p>An increase in the production of goods and services (D)</p> Signup and view all the answers

    What is the primary goal of market equilibrium?

    <p>To allocate resources efficiently (D)</p> Signup and view all the answers

    What is the primary goal of setting minimum and maximum price levels in an economy?

    <p>To ensure producers receive a fair price and consumers can afford essential goods (B)</p> Signup and view all the answers

    What is the primary function of social safety nets in an economy?

    <p>To support individuals who are unable to participate fully in the economy (A)</p> Signup and view all the answers

    What is the primary reason for the state's involvement in the production of goods and services?

    <p>To provide public goods and services that are not adequately provided by the private sector (A)</p> Signup and view all the answers

    What is the Production Possibility Curve (PPC) based on?

    <p>Assumptions of fixed resources and technology, full utilization of all resources, and the production of only two goods (B)</p> Signup and view all the answers

    What is the effect of an outward shift in the Production Possibility Curve (PPC)?

    <p>Economic growth, enhanced by better resources, improved technology, or increased investment (C)</p> Signup and view all the answers

    What is the primary goal of privatization?

    <p>To sell state-owned enterprises to private investors to increase efficiency and reduce public sector burdens (D)</p> Signup and view all the answers

    What is the primary challenge for governments regarding public sector interventions?

    <p>To design and implement interventions that avoid unintended consequences (A)</p> Signup and view all the answers

    What is the primary role of the public sector in the economy?

    <p>To provide public goods and services that are not adequately provided by the private sector (A)</p> Signup and view all the answers

    What is the effect of price floors and ceilings on the market?

    <p>To distort the natural balance of demand and supply, leading to inefficiencies (C)</p> Signup and view all the answers

    What is the primary role of indifference curves in economics?

    <p>To complement the Production Possibility Curve by showing different combinations of two goods that provide the same level of satisfaction or utility to a consumer (D)</p> Signup and view all the answers

    What is the primary purpose of setting minimum and maximum price levels?

    <p>To ensure producers receive a fair price and consumers can afford essential goods (B)</p> Signup and view all the answers

    What do social safety nets aim to provide?

    <p>Pensions, disability allowances, and child support grants (A)</p> Signup and view all the answers

    What is the primary goal of state production?

    <p>To provide essential goods and services (D)</p> Signup and view all the answers

    What does the Production Possibility Curve (PPC) demonstrate?

    <p>The trade-off between two goods or services (D)</p> Signup and view all the answers

    What is the effect of an improvement in technology on the PPC?

    <p>An outward shift (B)</p> Signup and view all the answers

    What do indifference curves show?

    <p>Different combinations of two goods that provide the same level of satisfaction (A)</p> Signup and view all the answers

    What is the primary consequence of monopolies in the market?

    <p>Higher prices and reduced competition (A)</p> Signup and view all the answers

    What is the primary challenge for governments regarding public sector interventions?

    <p>Balancing interventions with the need for economic efficiency and growth (A)</p> Signup and view all the answers

    What is the main goal of government intervention in markets?

    <p>To correct market inefficiencies and promote equitable distribution of resources (B)</p> Signup and view all the answers

    What is the primary goal of privatization?

    <p>To reduce public sector burdens (B)</p> Signup and view all the answers

    What can distort the natural balance of demand and supply?

    <p>Price floors and ceilings (A)</p> Signup and view all the answers

    What is the effect of inefficiencies in resource allocation on the PPC?

    <p>It leads to a suboptimal position on the PPC (D)</p> Signup and view all the answers

    What is the primary purpose of regulating monopolies?

    <p>To prevent monopolistic practices and promote competition (B)</p> Signup and view all the answers

    What is the primary role of the public sector in the economy?

    <p>To address market imperfections and provide public goods (D)</p> Signup and view all the answers

    What is the primary consequence of pollution in the market?

    <p>Harming society's wellbeing (C)</p> Signup and view all the answers

    What is the primary goal of income redistribution policies?

    <p>To reduce income disparities (D)</p> Signup and view all the answers

    What is the primary role of central banks in addressing inflation?

    <p>To reduce inflation rates through monetary tools (D)</p> Signup and view all the answers

    What is the primary consequence of high inflation rates?

    <p>Eroding purchasing power and destabilizing the economy (D)</p> Signup and view all the answers

    What is the primary purpose of price in a market economy?

    <p>To allocate resources efficiently (B)</p> Signup and view all the answers

    Which market structure is characterized by a large number of buyers and sellers, no barriers to entry, and full information availability?

    <p>Perfect Market (D)</p> Signup and view all the answers

    What is the relationship between price and the quantity supplied according to the Law of Supply?

    <p>Direct (B)</p> Signup and view all the answers

    What is the primary function of an exchange mechanism in a market?

    <p>To facilitate the transfer of goods or services from sellers to buyers (C)</p> Signup and view all the answers

    What is the primary difference between a consumer market and a factor market?

    <p>One deals with goods and services, the other with resources (A)</p> Signup and view all the answers

    What is the effect of the interaction of supply and demand in a market economy?

    <p>Prices adjust to guide the decisions of producers and consumers (C)</p> Signup and view all the answers

    What is the primary characteristic of imperfect markets?

    <p>One buyer or seller has the power to influence the market (C)</p> Signup and view all the answers

    What is the primary role of value in a market?

    <p>It indicates the worth of a good or service in terms of what it can be exchanged for (C)</p> Signup and view all the answers

    What is the primary function of markets in allocating resources?

    <p>To reflect collective consumer preferences through prices (B)</p> Signup and view all the answers

    What is the outcome of market forces adjusting supply and demand?

    <p>A balance and efficiency in the market (B)</p> Signup and view all the answers

    What is the primary reason for public sector intervention in the economy?

    <p>To address market failures and promote social welfare (C)</p> Signup and view all the answers

    What is the purpose of indirect taxes?

    <p>To raise revenue and reduce consumption (B)</p> Signup and view all the answers

    What is the effect of a maximum price (price ceiling) set too low?

    <p>A shortage of goods and services (A)</p> Signup and view all the answers

    What is the primary characteristic of public goods?

    <p>They are non-excludable and non-rivalrous (C)</p> Signup and view all the answers

    What is the purpose of government spending?

    <p>To allocate resources across various sectors (B)</p> Signup and view all the answers

    What is the result of the interaction of supply and demand in a market economy?

    <p>A stable market price (B)</p> Signup and view all the answers

    What is the primary goal of taxation?

    <p>To raise revenue and fund public services (C)</p> Signup and view all the answers

    What is the primary role of prices in a market economy?

    <p>To allocate resources and determine what goods and services are produced (C)</p> Signup and view all the answers

    What is the primary challenge in implementing public sector interventions?

    <p>Balancing economic efficiency with social welfare (A)</p> Signup and view all the answers

    What is the effect of a concave Production Possibility Curve (PPC)?

    <p>Increasing opportunity costs (C)</p> Signup and view all the answers

    What is the primary goal of setting minimum and maximum price levels?

    <p>To stabilize the economy (D)</p> Signup and view all the answers

    What is the primary purpose of social safety nets?

    <p>To support individuals who are unable to participate fully in the economy (D)</p> Signup and view all the answers

    What is the primary reason for the state's involvement in production?

    <p>To maintain strategic control in vital sectors (A)</p> Signup and view all the answers

    What is the primary function of indifference curves?

    <p>To help consumers make optimal purchasing decisions (A)</p> Signup and view all the answers

    What is the primary goal of privatization?

    <p>To increase efficiency and reduce public sector burdens (D)</p> Signup and view all the answers

    What is the primary effect of price floors and ceilings?

    <p>To distort the natural balance of demand and supply (B)</p> Signup and view all the answers

    What is the primary characteristic of public goods?

    <p>They are non-rivalrous and non-excludable (A)</p> Signup and view all the answers

    What is the primary outcome of uneven income distribution?

    <p>Market failures and inefficiencies (D)</p> Signup and view all the answers

    What is the primary function of the exchange mechanism in a market?

    <p>To facilitate the transfer of goods or services from sellers to buyers at agreed prices. (A)</p> Signup and view all the answers

    What is the primary characteristic that distinguishes a perfect market from an imperfect market?

    <p>A large number of buyers and sellers. (D)</p> Signup and view all the answers

    What is the primary role of utility in a market economy?

    <p>To measure the satisfaction a consumer derives from a good or service. (B)</p> Signup and view all the answers

    What is the primary outcome of the interaction of supply and demand in a market economy?

    <p>The determination of prices. (D)</p> Signup and view all the answers

    What is the primary difference between a consumer market and a factor market?

    <p>The type of goods and services traded. (B)</p> Signup and view all the answers

    What is the primary characteristic of imperfect markets?

    <p>One or more conditions of perfect markets are not met. (A)</p> Signup and view all the answers

    What is the primary role of prices in a market economy?

    <p>To serve as signals that help allocate resources efficiently. (D)</p> Signup and view all the answers

    What is the primary function of the market as a phenomenon?

    <p>To facilitate the exchange of goods and services. (C)</p> Signup and view all the answers

    What is the primary outcome of market equilibrium?

    <p>A stable market price (D)</p> Signup and view all the answers

    What is the primary function of indirect taxes?

    <p>To raise revenue for the government (D)</p> Signup and view all the answers

    What is the primary characteristic of merit goods?

    <p>They provide significant societal benefits (A)</p> Signup and view all the answers

    What is the primary outcome of market forces adjusting to changes in demand and supply?

    <p>Adjustment to new equilibrium (D)</p> Signup and view all the answers

    What is the primary purpose of government spending?

    <p>To fund public services (C)</p> Signup and view all the answers

    What is the primary outcome of a maximum price (price ceiling) set too low?

    <p>Shortages and black markets (C)</p> Signup and view all the answers

    What is the primary role of the public sector in the economy?

    <p>To address market failures (B)</p> Signup and view all the answers

    What is the primary outcome of subsidies to producers?

    <p>Increased production of goods and services (A)</p> Signup and view all the answers

    What is the primary characteristic of public goods?

    <p>They are non-excludable and non-rivalrous (B)</p> Signup and view all the answers

    What is the primary outcome of price floors set above the market equilibrium?

    <p>Surpluses of goods and services (A)</p> Signup and view all the answers

    Which of the following market failures is primarily responsible for reducing competition and potentially leading to higher prices?

    <p>Monopolies (B)</p> Signup and view all the answers

    What is the primary goal of government intervention in addressing monopolies?

    <p>To prevent monopolistic practices and promote competition (D)</p> Signup and view all the answers

    What is the ultimate result of inefficiencies in resource allocation?

    <p>Suboptimal position on the PPC curve (B)</p> Signup and view all the answers

    What is the primary role of government policies in addressing inefficiencies?

    <p>To move the economy towards the PPC curve (A)</p> Signup and view all the answers

    What is the primary advantage of the PPC curve in economics?

    <p>It provides insights into the trade-offs and choices facing economies due to scarce resources (D)</p> Signup and view all the answers

    What is the primary reason why governments intervene in markets?

    <p>To address market failures and promote equitable distribution of resources (D)</p> Signup and view all the answers

    What is the primary outcome of government intervention in addressing pollution?

    <p>Prevention of irreversible environmental damage (A)</p> Signup and view all the answers

    What is the primary relationship between the PPC curve and indifference curves?

    <p>The PPC curve analyzes the trade-offs and choices facing economies, while indifference curves help in understanding consumer preferences (B)</p> Signup and view all the answers

    What is the primary role of competition in a market?

    <p>To attract buyers and create a sense of urgency (C)</p> Signup and view all the answers

    Which of the following is a characteristic of factor markets?

    <p>Involve the trade of resources necessary for production (B)</p> Signup and view all the answers

    What is the primary outcome of the interaction of supply and demand in a market economy?

    <p>Price adjustment to guide producer and consumer decisions (D)</p> Signup and view all the answers

    What is the primary role of value in a market?

    <p>Indicates the worth of a good or service in terms of what it can be exchanged for (B)</p> Signup and view all the answers

    What is the primary characteristic of imperfect markets?

    <p>One or more conditions of perfect markets are not met (C)</p> Signup and view all the answers

    What is the primary function of an exchange mechanism in a market?

    <p>To facilitate the transfer of goods or services from sellers to buyers (D)</p> Signup and view all the answers

    What is the primary role of prices in a market economy?

    <p>To serve as signals that help allocate resources efficiently (A)</p> Signup and view all the answers

    What is the primary characteristic of a consumer market?

    <p>Deal with the exchange of finished products (A)</p> Signup and view all the answers

    What is the primary reason why governments intervene in markets?

    <p>To correct market failures and promote efficient allocation of resources (C)</p> Signup and view all the answers

    What is the consequence of an economy operating inside the PPC curve?

    <p>Suboptimal allocation of resources (D)</p> Signup and view all the answers

    What is the primary goal of regulating monopolies?

    <p>To promote competition and prevent monopolistic practices (C)</p> Signup and view all the answers

    What is the impact of inflation on the economy?

    <p>Erodes purchasing power (C)</p> Signup and view all the answers

    What is the primary goal of income redistribution policies?

    <p>To reduce income disparities (D)</p> Signup and view all the answers

    What is the primary reason for the existence of market failures?

    <p>Inefficient allocation of resources (B)</p> Signup and view all the answers

    What is the primary goal of environmental regulations?

    <p>To prevent businesses from causing irreversible environmental damage (C)</p> Signup and view all the answers

    What is the primary outcome of an economy operating on the PPC curve?

    <p>Optimal allocation of resources (D)</p> Signup and view all the answers

    What is the primary outcome of government intervention in addressing market imperfections?

    <p>Stabilization of the economy (D)</p> Signup and view all the answers

    What is the primary reason for setting minimum and maximum price levels?

    <p>To ensure producers receive a fair price (D)</p> Signup and view all the answers

    What is the primary goal of basic income grants?

    <p>To alleviate poverty (A)</p> Signup and view all the answers

    What is the primary reason for state production in vital sectors?

    <p>To ensure national security (A)</p> Signup and view all the answers

    What is the primary outcome of privatization?

    <p>Reduced public sector burdens (C)</p> Signup and view all the answers

    What is the primary characteristic of the PPC?

    <p>It illustrates the trade-offs between two goods (D)</p> Signup and view all the answers

    What is the primary effect of an outward shift in the PPC?

    <p>Increased economic growth (A)</p> Signup and view all the answers

    What is the primary role of indifference curves?

    <p>To understand the satisfaction a consumer derives from a good (D)</p> Signup and view all the answers

    What is the primary challenge for governments regarding public sector interventions?

    <p>Balancing interventions with economic growth (C)</p> Signup and view all the answers

    What is the primary outcome of price floors and ceilings?

    <p>Distortion of the natural balance of demand and supply (B)</p> Signup and view all the answers

    What is the primary outcome of market equilibrium?

    <p>Stable market prices and quantity traded (B)</p> Signup and view all the answers

    What is the primary role of prices in a market economy?

    <p>To allocate resources efficiently (C)</p> Signup and view all the answers

    What is the primary goal of public sector intervention in the economy?

    <p>To promote social welfare and fairness (A)</p> Signup and view all the answers

    What is the effect of a maximum price (price ceiling) set too low?

    <p>Shortage of goods and services (A)</p> Signup and view all the answers

    What is the primary characteristic of merit goods?

    <p>They provide significant societal benefits (B)</p> Signup and view all the answers

    What is the primary role of subsidies to producers?

    <p>To support industries crucial for economic stability (B)</p> Signup and view all the answers

    What is the primary outcome of an outward shift in the PPC?

    <p>Increased economic growth and production (A)</p> Signup and view all the answers

    What is the primary goal of government spending?

    <p>To fund public services and goods (B)</p> Signup and view all the answers

    What is the primary characteristic of public goods?

    <p>They are non-excludable and non-rivalrous (B)</p> Signup and view all the answers

    What is the primary goal of taxation?

    <p>To fund public services and goods (B)</p> Signup and view all the answers

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