Economic systems

Question 1

What are the three main types of economic systems?

Answer 1

mixed, command, and market economies.

Question 2

True or False: In a command economy, the government makes all economic decisions.

Answer 2

True.

Question 3

Fill in the blank: A __________ economy relies on supply and demand to allocate resources.

Answer 3

market

Question 4

Multiple Choice: Which economic system is characterized by private ownership of resources? A) Command B) Traditional C) Market

Answer 4

C) Market

Question 5

What is a mixed economy?

Answer 5

An economy that combines elements of both market and command systems.

Question 6

What role does the government play in a command economy?

Answer 6

The government controls production and distribution of goods and services.

Question 7

Fill in the blank: In a __________ economy, individuals and businesses make decisions based on their own interests.

Answer 7

market

Question 8

Multiple Choice: Which of the following is NOT a characteristic of a market economy? A) Consumer choice B) Government intervention C) Competition

Answer 8

B) Government intervention

Question 9

What are the advantages of a market economy

Answer 9

Market economy responds quickly to the peoples wants
There are a wide variety of goods
Efficient use of resources is encourage
Competition brings prices down so consumers get low prices
Consumer sovereignty

Question 10

True or False: Command economies are often associated with authoritarian governments.

Answer 10

True.

Question 11

Fill in the blank: In a __________ economy, the allocation of resources is determined by collective decision-making.

Answer 11

command

Question 12

Multiple Choice: Which economic system is most likely to provide equal distribution of wealth? A) Market B) Command C) Traditional

Answer 12

B) Command

Question 13

What is an economic system?

Answer 13

Economic systems are arrangements of how resources are allocated in an economy.

Question 14

What is a free market economy?

Answer 14

A free market economy is an economic system where the price mechanism determines how to allocate resources with little or no government intervention.

Question 15

What are the features of a free market economy?

Answer 15

1. All resources are privately owned by people and firms
2. Profit is the main motive of all business
3. Consumers are free to choose
4. There is little to no government intervention
5. Producers can produce whatever they want, however they want, and for who ever they want to produce
6. Price is determined by the price mechanism

Question 16

What are the advantages of a free market economy?

Answer 16

1. Free market responds quickly to the peoples wants
2. Wide variety of goods
3. Efficient use of resources encouraged
4. Competition brings prices down so consumers get low prices
5. Consumer sovereignty

Question 17

What are the disadvantages of a free market economy?

Answer 17

1. Certain goods may not be available
2. Consumption of harmful goods may be encouraged
3. Profit motive may lead to production of less quality products
4. External costs are not considered
5. Private ownership may lead to inequality