Review of Economic Systems

As a factor of production, the instruction provided by a teacher is considered—

• labor

• resources

• capital

• entrepreneurship

Purchasing a new piece of equipment for one's factory is affecting which factor of production?

• 1. Entrepreneurship

• 1. Physical capital

• 1. Land resources

What are the three basic economic questions all societies must answer?

• 1. Who gets to produce goods and services, who gets to consume them, and who collects the profits?

• 1. Why should goods and services be produced, when should they be produced, and how should they be produced?

• 1. Where should goods and services be produced, who should sell them, and who should get the profits?

• 1. What goods and services should be produced, how should they be produced, and who will consume them?

Key advantages of free market economic systems include

• 1. rising prices, specialization, negative incentives, and multiple markets.

• 1. online markets, producer sovereignty, self-interested consumers, and low prices.

• 1. economic efficiency, economic freedom, economic growth, and variety of goods.

• 1. positive incentives, negative incentives, specialized consumers, and efficient labor.

In a free market system, the concept of consumer sovereignty (or consumer power) means that

• 1. consumers have the power to decide through their actions what goods and services get produced.

• 1. producers are in an ongoing struggle with consumers over control of the marketplace.

• 1. government must intervene to ensure fair competition between consumers and producers.

• 1. consumers are not bound to accept the positive incentives offered by producers.

Which of the following is typical of a centrally planned economy?

• 1. competition among producers

• 1. consumer power

• 1. government control

• 1. private property

Which of the following represents a difference between mixed and communism?

• Mixed requires central control of all productive resources; communism does not.

• 1. Mixed may allow some free market practices; communism does not.

• 1. Mixed emphasizes the equal distribution of wealth; communism does not.

• 1. Socialism depends on authoritarian government; communism does not.

What is a disadvantage of central planning?

• 1. no emphasis on economic equity

• 1. lack of economic efficiency

• 1. too much individual freedom

• 1. overreliance on profit incentive

What might be the economic benefit of the government providing a public good rather than the private sector?

• 1. decreased prices for the good

• 1. decreased cost for the good

• 1. increased taxes needed to provide the good

• 1. greater efficiency in providing the good

The distribution of income received in the form of rent, wages, or interest is the main factor that determines

• 1. how goods and services are produced.

• 1. where goods and services are consumed.

• 1. who produces goods and services.

• 1. who consumes goods and services.