Quiz 2 1 The government policy highlighted in the article was consistent with the Invisible Hand Theory 2 The author expressed right wing views about the economy in this article 3 The author expressed support for laissez faire False True True False 4 In theory the total economic surplus of society is likely to increase after the implementation of the government policy mentioned in this article 5 When society s factors of production are allocated to produce goods services demanded by consumers we have an economic surplus that results in profitable producers is driven by central pricing promotes consumer sovereignty encourages greater social equality Producers will earn economic profits Consumer sovereignty Efficiency in resource allocation 6 Which of the following is not an outcome that is facilitated by the price mechanism in the market economic system Producers are guided by price signals in decision that relate to resource allocation 7 Which of the following is not a goal characteristic outcome of the command economic system Encourage greater income equality Bureaucrats answer the questions of what how for whom for society No private ownership of property factors of production Creative destruction takes place in the economy 8 During the market cleansing process scarce resources are redirected from less productive producers to more productive ones resulting in moral hazard situations in the economy 9 Government grants subsidies may create distortions in the economy whereby certain sectors end up being disproportionately larger smaller than their optimal size as determined by free market forces False True 10 Which of the following is not a characteristic of capitalism The allocation of resources is driven by dollar votes that consumers cast for goods services The allocative function of price will facilitate the flow of scarce resources to their highest valued uses The rationing function of price facilitates the efficient distribution of scarce goods to the highest bidders Government provides grants subsidies to increase total economic surplus improve social equality