Basic Economics Concepts Quiz

What is the law of supply and demand?

• The law of supply and demand states that prices will remain constant regardless of the level of demand

• The law of supply and demand only applies to luxury items and not necessities

• The price of a good or service is determined by the supply of the product and the demand for that product.

• Supply and demand have no impact on the price of goods and services

What is a free market economy and how does it work?

• A free market economy is an economic system where prices are set by the government

• A free market economy is an economic system where prices are determined by random chance

• A free market economy is an economic system where prices are determined by the weather

• A free market economy is an economic system in which prices are determined by supply and demand, with little or no government interference.

What is a command economy and how does it differ from a free market economy?

• A command economy is where the government has no control over production

• In a free market economy, the government makes all the decisions about what and how to produce

• A command economy is based on supply and demand, while a free market economy is controlled by the government

• A command economy is where the government makes all the decisions about what and how to produce, while in a free market economy, decisions are made by individuals and businesses based on supply and demand.

What are the factors that affect demand in an economy?

• Number of producers in the market

• Weather conditions

• Price, consumer income, consumer preferences, price of related goods, and consumer expectations

• Government regulations

How does competition impact the free market economy?

• Competition leads to innovation and lower prices

• Competition leads to monopolies and less consumer choice

• Competition leads to higher prices and less innovation

• Competition has no impact on the free market economy

What role does the government play in a command economy?

• The government only provides minimal guidance in economic matters

• The government has no involvement in economic decisions

• The government plays a minor role in controlling the means of production

• The government plays a dominant role in making economic decisions and controlling the means of production.

What is the role of consumers in a free market economy?

• Consumers have no role in a free market economy

• Consumers determine the demand for goods and services, influencing prices and production

• Consumers only role is to purchase goods and services

• Consumers control the supply of goods and services