Economics: Chapter 2 Review

In free-enterprise economic systems the key economic question of "what goods will be produced" will be decided by

• what producers are able to produce.
• what producers are willing and able to produce.
• what consumers want to produce.

Consumers will purchase

• what they want and need.
• what they have money to buy.
• what they are willing and able to buy.

The key difference between private and public property is that

• private property is owned privately by the government.
• private property is owned by individuals.
• public goods are owned by businesses.

In a free-enterprise system, the main incentive for actions is

• trying to work with others.
• working to earn more money.
• working to benefit the world.

The free-enterprise system answers the basic economic questions in the same way that all other economic systems answer them.

• True
• False

Individuals make themselves better off by trading what they value less for what they value more.

• False
• True

If a television station cannot sell advertisements on a certain show at a certain time, what would the best choice be for that television station?

• work harder on getting advertisements
• cover the costs from the station profits
• substitute a show that advertisers will support

Which of the following statements is true about resources?

• Profit is like a magnet, pushing resources away.
• Resources flow away from profits.
• Resources flow toward profit.

Which of the following statements is true about profit?

• Profit is earned if total revenue is greater than total costs.
• Profit is earned if total cost is greater than total revenue.
• Profit is always earned in business.

Businesses try to copy the actions of successful businesses.

• True
• False