Unit 1 Review

Who answers the basic economic question in a Command Economy?

• Central Government

• Consumers

• Producers

• Military

Centrally planned economies are at a disadvantage because

• Doesn't guarantee jobs and income

• The government has the final say in all decisions

• Producers can't answer consumer signals or demands

• Can't produce because resources are scarce

What economic goal do Communist and Socialist systems BOTH try to achieve?

• Freedom

• Equity

• Efficiency

• Profit

What is something Firms/Producers do in a market economy?

• They buy the products

• They provide the Factors of Production

• They are the key part in a Market Economy

• Use the Factors of Production to create goods

A way government affects the physical flow in a market economy is?

• Buying products from producers

• Supplying products to Households

• Buy supplies from the government

• Tax producers to support households

What is the main purpose of consumer in a Market Economy?

• To provide competition

• To decide who gets to consume goods and services

• To tell producers what and how much to make

• To ask the government to tax them

What is a key idea in a Free Enterprise System?

• Variety of Goods

• Competition

• Property Rights

• Consumerism

Any point on the PPC represents

• Economic Efficiency

• Underutilization

• Unobtainable Reach

• Unemployment

Production possibilities curves show

• How much consumers can consume

• How much producers can produce

• How many people are employed

• Various ways of using an economies resources to their full potential

Scarcity...

• Only exists in poor countries

• Affects all societies

• leads to lower prices

• leads to competition