The Market Economy

What defines a consumer in a market economy?

• Someone who acquires goods and services for personal use

• A government official deciding what should be produced

• A business that sells goods internationally

• Someone who makes goods or offers services

What is a mixed-market economy also known as?

• Command economy

• Traditional economy

• Socialist economy

• Capitalist economy

What motivates producers to sell their goods or services?

• The idea of making a profit

• Competition with other producers

• Consumer feedback

• Government regulations

What does competition lead to in a market economy?

• Government intervention in pricing

• Innovation and better products

• Higher prices for all goods

• A decrease in the quality of goods

What happens when there is high demand but low supply?

• The government will produce more

• Prices will increase

• Producers will stop making the product

• Prices will decrease

What is the opportunity cost?

• The profit made from selling a product

• The total expenses of a business

• The benefit given up by choosing one option over another

• The cost to produce a good or service

What is scarcity?

• Government control over resources

• The limited amount of resources available

• Unlimited wants and needs

• An abundance of resources

What characterizes a command economy?

• Producers decide what to produce

• Consumers have unlimited choices

• The government makes production and pricing decisions

• Market forces of supply and demand determine prices

What role does innovation play in a competitive market?

• It decreases the variety of products available

• It reduces the motivation to produce

• It increases government regulation

• It leads to newer, better products

What happens when supply and demand are out of balance?

• The government will always intervene

• Consumers become producers

• It can lead to job losses and price changes

• The market ceases to exist