Ch 1 What is Economics?

A market economy and a command economy differ primarily in what?

• resources available
• society's welfare
• types of goods and services produced
• the way economic choices are made 

Human resources include what?

• energy, skills, talent, and knowledge
• furniture, car, and clothes
• money, tools, and materials
• none of the above

Which of the following is one of the 4 qualities of a market economy?

• scarcity
• opportunity cost
• free economic choice
• innovation

What is the key incentive for individuals and businesses to produce goods and services?

• competition
• job satisfaction
• profit
• government regulation

What is innovation?

• another word for competition
• application for scientific knowledge to practical uses
• result of equilibrium
• process of creating something new 

In a market economy, competition for profits encourages _____.

• product improvements
• lower prices
• greater variety of goods and services
• all of these 

True of False: Services are physical items such as food and clothing.

• True
• False

True or False: The free enterprise system (market economy) is privately owned businesses. 

• True
• False

True or False: The desire for profit motivates people to spend money.

• True
• False

True or False: Most economies are mixed.

• True
• False