Part 2: 7 Major Sources of Economic Progress CSE

In a market economy, a legal system is important in order to:

• protect private property and enforce contracts.

• take over industries that provide public goods.

• put in place tariffs and other protection policies to promote domestic production.

What keeps businesses from raising prices too high or offering quality that is too low?

• the benevolence of the supplier

• competition

• the government

In a market economy, how does the self-interest of producers work to the consumers' advantage?

• In the desire to earn a profit, producers must produce goods and services that are of value to consumers, as all exchange is voluntary.

• If producers are not producing what consumers want, the government will step in and mandate production levels and prices.

• Producers are greedy, profit-driven entities that do not care about the desire of consumers.

The protection of individual property rights is the most important feature of a legal system.

• Strongly Disagree

• Disagree

• Agree

• Strongly Agree

E2.1. Which of the following is NOT a reason why fairly enforced private property rights are the foundation of economic progress?

• They make it possible for owners to harm others without being accountable.

• They encourage owners to develop their property in ways that help others.

• They provide incentives for owners to be good stewards of their property.

E2.2. Competition is important for the market because it keeps producers accountable to consumers by:

• Keeping prices low and quality high

• Keeping prices high and quality high

• Keeping prices high and quality low

• Keeping prices low and quality low

Why do established businesses desire an increase in government regulation in their market?

• Established businesses want to help new entrepreneurs enter the market and increased regulations can make this process more efficient.

• Regulations can be used to restrict competition as new entrepreneurs are unable to afford to comply with roadblocks set in place.

• Businesses want to make sure that the government is involved in keeping products safe for consumers.

Which of the following statements is true regarding private versus government-funded investment projects?

• A government-funded project responds more quickly to incentives ensuring an efficient allocation of resources.

• A government-funded project is less likely to be swayed by political influence than a privately funded project.

• A private investor responds more efficiently to risk and rewards to allocate capital to projects where value creation for consumers can be optimized.

Inflation occurs when:

• prices rise due to greedy producers

• supply chain issues arise causing wholesale prices to increase

• there is rapid growth in the money supply

A useful mechanism for curbing inflation is government-regulated prices.

• Strongly Disagree

• Disagree

• Agree

• Strongly Agree