Topic 2 Review

What are the three key economic questions every society must answer?

• Supply, demand, or pricing?
• Labor, capital, or production?
• what to buying, selling, and invest?
• What to produce, how to produce, Who consumes it?

In a free market economy, who determines what goods and services are produced?

• The government
• Private buisnesses and consumers
• Central planners
• Foreign investors?

Which economic system is most associated with government control of all industries?

• Free market economy
• mixed economy
• Centrally planned economy
• Traditional economy

A business has to decide whether to use machines or human labor to make its products. Which key economic question is this related to?

• What to produce
• How to produce
• Who consumes it
• Who controls production

Which of the following best explains the economic problem of scarcity?

• Governments do not distribute resources fairly
• The economy does not produce enough goods
• There are unlimited wants but limited resources
• People have too many choices in the market

Which of the following factors does NOT affect how goods and services are produced?

• The personal preference of consumers
• Avaiability of technology
• Government regulations
• The cost of labor and resources

In a centrally planned economy, who answers the three key economic questions?

• Buisness owners
• The government
• Consumers
• The stock market

Which of the following is not a characteristic of a free market economy?

• Private property
• Government control of production
• Consumer soverighnty
• Competition

What role does competition play in a free market economy?

• It forces companies to reduce wages of a worker's income
• It drives innovation and keeps prices low
• It makes all businesses the same
• It eliminates small businesses

What is the primary motivating factor for producers in a free market?

• Government quotas
• Social Equality
• Profit
• Availability of labor