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1. The circular-flow diagram is a
A. visual model of how the economy is organized.
B. visual model of the relationships among money, prices, and businesses.
C. model that shows the effects of government on the economy.
D. mathematical model of how the economy works.
The Circular Flow Diagram is a schematic representation of the organization of the economy. Decisions are made by households and firms. Households and firms interact in the market for goods and services (where households are buyers and firms are sellers) and in the markets for the factors of production (where firms are buyers and households are sellers). Source: http://webcache.googleusercontent.com/search?q=cache:bbjwAVHcoigJ:www.docstoc.com/docs/4191683/The-Circular-Flow-Diagram+circular+flow+diagram&cd=8&hl=en&ct=clnk&gl=jm
2. In most societies, resources are allocated by
A.a single central planner.
B.a small number of central planners.
C.those firms that use resources to provide goods and services.
D.the combined actions of millions of households and firms.
Economics is the study of how society manages its scarce resources. In most societies, resources are allocated not by a single central planner but through the combined actions of millions of household firms. Economists therefore study how people make decisions: how much they work, what they buy, how much they save, and how they invest their savings. Source: http://krusekronicle.typepad.com/kruse_kronicle/2009/08/theologians-and-economists-scarcity-and-abundance.html
3. Buyers and sellers who have no influence on market price are referred to as
A. market pawns.
C. price takers.
D. price makers.
A price taker is an individual or company which is not influential enough to affect the price of an item. For example, a company is considered to be a price taker if the ...
This solution provides information for a set of introductory economics multiple choice questions.