Chapter 3 Free Enterprise System Test

How can inequality or discrimination hurt an economy’s ability to maximize its human capital? Give two examples

How do the decisions you make as a consumer affect the economy?

What do you think might happen if the government passed a law saying it could overturn the terms of an existing contract between companies?

Suppose you had a job that you did not like. If the economy was in the downward part of the business cycle, would you be more or less likely to quit your job and look for a better one? Why?

Suppose that Congress passed a bill funding research into alternative sources of energy. Which goals of governmental action in the economy would this funding meet?

Identify three individual qualities and actions that you think demonstrate a strong work ethic. Explain why you chose each one.

Why is national defense an example of the free rider problem?

What are the characteristics of a public good?

Give an example of a positive ANDa negative effect of externality.

Because of the interstate highway system, transportation costs are lower. How is this an example of positive externalities?