Understanding Free Enterprise System

What is a free enterprise system?

• A system where the government controls all businesses

• A system where businesses operate with little government interference

• A system where only the government provides goods and services

• A system where businesses set all laws and regulations

In a free enterprise system, who decides what to produce and sell?

• The government

• Consumers only

• Businesses and entrepreneurs

• The president

What happens when demand for a product is high but supply is low?

• Prices decrease

• Prices increase

• Prices stay the same

• The government sets a fixed price

What does scarcity mean?

• Having too much of a product

• Having just enough of a product

• Not having enough of a product to meet demand

• Lowering prices to attract more buyers

What happens when there is a surplus of a product?

• The price of the product increases

• The price of the product decreases

• Demand increases

• Businesses stop selling the product

If there is bad weather in Florida and most of the banana crop is damaged, what will likely happen to banana prices?

• Prices will decrease

• Prices will stay the same

• Prices will increase

• Bananas will no longer be sold

When demand is low and supply is high, what happens to prices?

• Prices increase

• Prices decrease

• Prices remain unchanged

• The government sets new prices

A famous singer is holding a one-night concert, and tickets are selling fast. What does this situation represent?

• Surplus

• Scarcity

• Equal supply and demand

• Price control

If a store has extra Easter candy after Easter, what economic principle is this an example of?

• Scarcity

• Supply and demand

• Surplus

• Inflation

What does supply refer to in economics?

• The amount of goods and services available

• The number of people who want a product

• The amount of money in the economy

• The price of a product