Chapter 1: Economic Decisions and Systems

Which of the following scenarios will probably cause prices to drop?

• A new snack food is very popular, and only one company produces it.
• A new snack food is very popular, and only one company produces it.
• Many companies begin producing a product in relatively high demand.
• Half of the world's diamond mines shut down production. 4 

Generally, as the price of a product increases,

• consumers will be willing to purchase larger quantities of the product.
• businesses will be willing to supply larger quantities of the product.
• the supply curve will slope downward.
• demand will increase.

The rivalry among businesses to sell their goods and services is known as

• entrepreneurship.

• competition.

• capitalism.

• the right of private property.

In the U.S., you can own anything you want and decide what you want to do with it, as long as it does not violate the law.  This describes the principle of  

• scarcity.
• competition.
• the command economy.
• the right of private property.

Which of the following is NOT an especially important principle of the U.S. economic system?

• freedom of choice
• private property
• tradition
• profit

Another name for the economic system in the United States is

• private enterprise
• capitalism
• free enterprise
• all of the choices given

Who owns the economic resources in a market economy?

• the people of the country
• the tribal elders
• the government
• business people and entrepreneurs but not consumers

Which type of economy is usually centered mainly on meeting people's basic needs?

• market economy
• command economy
• traditional economy
• mixed economy

The government of Erewhon owns and controls all economic resources and decides how those resources will be used.  The government even assigns people specific jobs and careers.  Erewhon uses which type of economic system?

• market economy
• command economy
• traditional economy
• laissez-faire economy

All nations must decide

• what combination of resources will best suit its circumstances.
• which wants and needs are most critical.
• which goods and services to produce.
• all of the given choices.