Economic Systems

Elijah, Samuel, and Maya are planning to start a business. They are discussing the three basic economic questions they need to answer. What are these questions?

• What to produce? How to produce? For whom to produce?

• What to produce? How to produce? For whom to sell?

• What to sell? How to sell? For whom to sell?

• What to consume? How to consume? For whom to consume?

Noah, Abigail, and Benjamin are discussing different types of economies. Noah suggests that a market economy can also be called a

• mixed economy

• free market economy

• command economy

• planned economy

Samuel, Arjun, and Grace are discussing the characteristics of a Market Economy. They came up with three characteristics. Can you identify which group of characteristics correctly describes a Market Economy?

• Private ownership of resources, regulated market, and significant government intervention.

• Private ownership of resources, free market, and minimal government intervention.

• Public ownership of resources, monopolized market, and maximum government intervention.

• Government ownership of resources, controlled market, and heavy government intervention.

Grace runs a lemonade stand. When she increases the price of her lemonade, she notices fewer people are buying it. What is this scenario demonstrating about the relationship between supply and demand?

• They are inversely related.

• Supply determines demand.

• They are unrelated.

• They are directly related.

What is the primary role of the government in a market economy?

• To control all economic activities

• To provide public goods and services

• To own and manage all resources

• To set prices for goods and services

What is the main characteristic of a command economy?

• Free market and private ownership

• Government control and public ownership

• Unregulated market and minimal government intervention

• Mixed ownership and regulated market

Grace runs a bakery. What happens when the demand for her cupcakes exceeds the supply in the market?

• The price of the cupcakes decreases

• The price of the cupcakes increases

• The supply of the cupcakes increases

• The demand for the cupcakes decreases

What is the main characteristic of a mixed economy?

• Government control and public ownership

• Free market and private ownership

• Combination of private and public ownership with a regulated market

• Unregulated market and minimal government intervention

Aiden, Michael, and Lily started a lemonade stand. They made more lemonade than they could sell. What happens in this situation in a market economy?

• The price of the lemonade increases

• The demand for the lemonade decreases

• The price of the lemonade decreases

• The supply of the lemonade decreases

What is the role of competition in a market economy?

• To control all economic activities

• To provide public goods and services

• To regulate prices and ensure quality

• To set prices for goods and services