Civics and Economics Study Guide

What is the primary characteristic of the United States economy?

• Command economy

• Free market economy

• Mixed economy

• Traditional economy

In a market economy, what determines prices?

• Government intervention

• Supply and demand

• Consumer preferences

• Producer costs.

What does consumer sovereignty mean?

• Consumers have no choice

• Consumers determine what goods and services will be produced

• Government decides production

• Producers have full control.

Fill in the blank: Higher prices for a good or service provide incentives for buyers to purchase ______.

• more

• less

• the same amount

• none

What is consumer sovereignty?

• A) Government control over production

• B) Consumer control over production

• C) Producer control over prices

• D) No control over production

What does free enterprise allow markets to do?

• Operate with government interference

• Operate without government interference

• Be controlled by the government

• Be owned by the government.

What is the equilibrium price?

• The price where supply and demand meet

• The price where only supply meets

• The price where only demand meets

• The price set by the government.

Which type of business ownership involves one owner taking all the risks and profits?

• Partnership

• Corporation

• Proprietorship

• Cooperative

In a partnership, how many owners share the risks and profits?

• One

• Two or more

• None

• Only two

Entrepreneurs often foster ______ by bringing new goods and services to market.

• stagnation

• technological progress

• economic decline

• monopoly