Characteristics of Economic Systems

​Private Ownership Ability of individuals and businesses in an economy to buy, sell, and hold property as they wish without fear of government interference or seizure.

Profit Motive Opportunity to keep the amount of money left when revenues are greater than expenses.

Consumer Sovereignty Consumers have power to determine what goods & services are produced.

Competition Rivalry among businesses

Government Regulation Extent to which a central authority has control over the production and consumption decisions in an economy; government involvement

​Characteristics of Economic Systems

Multiple Choice

"Consumers can use their spending power as ‘votes’ for goods. In return, producers will respond to those preferences and produce those goods." Which of the following characteristics of a market economy does the quote best describe?

• private ownership

• profit motive

• competition

• consumer sovereignty

Multiple Choice

The freedom to buy, sell, and utilize property, as protected in the 5th amendment, underlies all real estate transactions and markets. Any restrictions placed on a property owner from realizing the highest and best use of that property hinders economic growth and development and reduces freedoms inherent in our society. This is describing which characteristic of a market economy?

• government regulation

• private ownership

• competition

• profit motive

Multiple Select

Competition in the market leads to which of the following? (Choose 2)

• higher prices

• lower quality products

• more choices

• lower prices

Multiple Choice

What drives entrepreneurs to create new businesses?

• profit motive

• government regulation

• competition

• consumer sovereignty

Multiple Choice

How do private property rights encourage individuals to work, save, and invest?

• Any earnings or wealth cannot be passed on through inheritance.

• Individuals can keep the gains they earn.

• Most investments are guaranteed by the government.

• Most earnings of individuals will go to the government.

Multiple Choice

Oldtown has only two grocery stores, but that is about to change. Coming this fall, two new grocery store chains are opening that focus on offering a wide variety at low prices. What impact will this have on the people of Oldtown?

• The local government should increase taxes on groceries to help pay for new infrastructure.

• At least one of the grocery stores will go out of business due to increased costs.

• The supply of groceries in Oldtown will increase, but demand will decrease, leading to a shortage in basic necessities.

• This would increase competition among the grocery stores, which should lead to higher productivity and lower prices for consumers.

Multiple Choice

What fundamental question relates most directly to consumer sovereignty?

• How will the system promote progress?

• Where will good or services be offered for sale?

• How will the goods and services be produced?

• What goods and services will be produced?

Multiple Choice

Typically, how does government regulation impact producers?

• lowers costs

• increases profit motive

• makes starting a business easier

• discourages new producers to enter the market

Multiple Choice

Typically, how does government regulation impact consumers?

• lowers prices

• leads to more choices

• creates safer products

• limits options