Free Market Economy Quiz

What is a free market economy?

• An economic system with fixed prices

• An economic system based on supply and demand

• An economic system with government intervention

• An economic system with no private ownership

What determines prices and wages in a market economy?

• International trade agreements

• Labor unions

• Supply and demand in the open market

• Government regulations

What is the role of financial markets in a market economy?

• To provide subsidies to small businesses

• To regulate competition among businesses

• To facilitate investment and capital accumulation

• To control prices of goods and services

What does private ownership of resources allow individuals and businesses to do?

• Avoid competition in the market

• Receive government subsidies

• Make decisions about resource usage and benefit from profits

• Control government policies

What motivates individuals and businesses in a market economy?

• Government regulations

• Pursuit of profit

• Labor unions

• Social welfare

What does competition among businesses in a market economy lead to?

• Decrease in consumer choices

• Monopolies and price fixing

• Innovation and improvement in products and services

• Higher prices and lower quality products

What is the advantage of the pursuit of profit in a market economy?

• Decrease in job opportunities

• Decrease in innovation

• Expansion and creation of more job opportunities

• Decrease in business growth

What do larger businesses in a market economy benefit from?

• Decrease in job opportunities

• Decrease in efficiency

• Decrease in competitive prices

• Economies of scale and investment in research and development

What is the primary method of determining production, consumption, and allocation of goods and services in a market economy?

• Government regulations

• Market interactions including buying and selling, competition, and supply and demand

• International trade agreements

• Labor unions

What is the main characteristic of a market economy?

• Government control of resources

• Lack of competition among businesses

• Private ownership of resources

• Fixed prices and wages