Stock Trading and Other Things

A few macroeconomics questions - help plz?

1. Which of the following statements describe a command economy?

I. The government (democratically elected, ruling party, or dictatorship) acts as a central authority that answers the fundamental economic questions.

II. A nation's natural resources, industries, and businesses are owned and operated by the government or central authority on behalf of society.

III. The government or central authority is responsible for providing economic security and equity for all of a nation's citizens.




A. I, II, and III

B. II and III only

C. I only

D. I and II only

E. I and III only

2.Iggi and Kurt each own an ice cream shop that sells homemade ice cream on a homemade waffle cone. The table below shows the number of ice cream scoops and waffle cones that Iggi and Kurt produce in an hour. Both Iggi and Kurt work 8 hours per day and spend their time producing ice cream, waffle cones, or a combination of the two.

Ice Cream Waffle Cones
(Scoops per hour) (Cones per hour)
Iggi248
Kurt164


Consider the production of ice cream. Which of the following is true?




A. Neither Kurt nor Iggi has a comparative advantage in the production of ice cream.

B. Both Kurt and Iggi have a comparative advantage in the production of ice cream.

C. Iggi has a comparative advantage in the production of ice cream.

D. Kurt has a comparative advantage in the production of ice cream.

3. Iggi and Kurt each own an ice cream shop that sells homemade ice cream on a homemade waffle cone. The table below shows the number of ice cream scoops and waffle cones that Iggi and Kurt produce in an hour. Both Iggi and Kurt work 8 hours per day and spend their time producing ice cream, waffle cones, or a combination of the two.

Ice Cream Waffle Cones
(Scoops per hour)(Cones per hour)
Iggi248
Kurt164


Suppose that Iggi and Kurt begin trading ice cream and waffle cones with each other. What can be said about the specialization patterns between Iggi and Kurt?




A. Kurt will trade ice cream for waffle cones and Iggi will trade waffle cones for ice cream.

B. There is no information to determine who will trade waffle cones for ice cream and who will trade ice cream for waffle cones.

C. Kurt will trade waffle cones for ice cream and Iggi will trade ice cream for waffle cones.

4. In his book The Wealth of Nations, Adam Smith mentioned a defining principle in the study of economics: firms and resource suppliers pursuing their self-interest will simultaneously, as though guided by an "invisible hand," promote social interest as well.


The invisible hand functions under the key assumption that ______________.



A. All businesses are earning above-normal profits

B. The market system is highly competitive

C. Consumer sovereignty does not exist in the market system

D. There is unknown, or invisible, information to sellers and buyers

Public Comments

1. 1. A
2. C
3. A
4. C and it can be B as well. We're presuming that in a competitive market we as buyers and sellers can find a balance and agreement in price and value. The concept of invisible hand assumes that there is not a functioning society where the consumer does not have choice and the seller does not agree or agree to sell a good at a fixed price without consulting on the demand side of the product or service.

Sorry I wish I could be more helpful

2. ^^^... just no.

1) D (III is a normative statement!)

2) and 3) Notice Iggi produces more of both cones and scoops using the same resources and the same amount of time, so he has a comparative advantage over Kurt in both.

4) B (consumer sovereignty is a GOOD thing for free markets)