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This quiz consists of 5 multiple choice and 5 short answer questions through Chapter 2, The Tyranny of Controls.

Multiple Choice Questions

1. Some people support tariffs because they think that tariffs:
(a) result in increased efficiency
(b) lower prices
(c) offer protection for consumer
(d) create jobs

2. The higher price of pencils results in all but the following:
(a) the firing of more workers to produce pencils
(b) fewer pencils
(c) higher wages for pencil production workers
(d) better worker condiciton for pencil prolduction workers

3. Protection refers to:
(a) insurance and benefits for workers
(b) safe production methods
(c) insurance on shipments
(d) tariffs and other trade restrictions

4. International trade theory is based on:
(a) geography
(b) the principle of comparative advantage
(c) the principle of absolute advantage
(d) inflows and outflows

5. The price system functions in such a way that each individual acting in his own best interests, makes everyone better off. This concept is known as the:
(a) visible hand
(b) command
(c) invisible hand
(d) voluntary nature

Short Answer Questions

1. What is a good source of information on prices and markets?

2. According to Friedman, the former Soviet economy was based on:

3. Trade restrictions create:

4. Prices function to transmit information to all but:

5. The command elements of every economy include things like:

(see the answer key)

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