1. What are the advantages of using capital in the production process?
2. What is meant by the term "division of labor"?
3. What are the advantages of specialization in the use of human and material resources?
4. Explain why exchange is the necessary consequence of specialization.
5. In the 1990s thousands of "dot-com" companies emerged with great fanfare to take advantage of the Internet and new information technologies. A few, like Yahoo, eBay, and Amazon, generally thrived and prospered, but many others struggled and eventually failed. Explain these varied outcomes in terms of how the market system answers the question "What goods and services will be produced?"
6. Evaluate and explain the following statements:
a.) The market system is a profit-and-loss system.
b.) Competition is the disciplinarian of the market economy.