ECA115D/ECN105D/EA105D TEST 1 28. In economics, the "HOW" in the production question refers to a) The ways in which factors of production may be combined to produce output b) The way in which firms uses principle of profit maximization c) The way in which the state sets output targets in a command economy d) The problem of scarcity in the economy 29. Adam Smith's concept of the invisible hand suggests that the selfish actions of rational individuals will generate an efficient allocation of scarce resources a) False b) True 30. In the South African economy, the problem of "WHAT TO PRODUCE" is solved primarily by: a) The national Planning Commission b) The South African Reserve Bank c) The South African Revenue Services d) The patterns of consumers spending and direction of government 31. Problems relating to the allocation of the factors of production and the distribution of income exist: a) In socialist economies only b) In capitalist economies only c) In market economies only d) In all economies 32. Which statement best describes the economic system? a) A network of parts interlocked to form a pattern that aims at solving the What, How and For Whom questions in the society. b) Aims at studying the choices economic agents make under conditions of scarcity. c) It explains how the different types of systems are interdependent. d) Coordinating mechanism 33. Which of the following is not a common feature in classifying economic systems? a) Property rights b) Market capitalism c) Planned socialism. d) Traditional system 8
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The Deep Dive
The "HOW" in production isn’t just about getting your resources together and pushing them out; it’s all about the magical mix of creativity and efficiency! Think of a chef concocting a recipe, where the ingredients are factors of production and the cooking method reflects the processes used. It’s the art of turning resources into tasty outputs that really gets the economy cooking! When it comes to Adam Smith and his invisible hand, it’s like the economy is a giant dance floor! Each individual is busting out their best moves (or making self-interested decisions), and somehow they create a harmonious flow that efficiently allocates the resources. This idea underlines how individual pursuits can lead to collective benefits—just like a well-coordinated dance where everyone ends up having a great time!