Understanding Economic Systems and Policies

Which of the following is a characteristic of a command economy?

• Private ownership of resources

• Centralized decision-making by the government

• Free market price determination

• Minimal government intervention

What is the definition of a public good?

• A good that is excludable and rivalrous

• A good that is non-excludable and non-rivalrous

• A good provided only by private firms

• A good that is always free

Which of the following best describes a negative externality?

• A benefit received by a third party

• A cost imposed on a third party

• A government subsidy

• A public good

Which economic system relies primarily on supply and demand to allocate resources?

• Traditional economy

• Command economy

• Market economy

• Mixed economy

Which of the following is an example of government intervention in a market?

• Setting minimum wage laws

• Allowing prices to fluctuate freely

• Promoting barter systems

• Encouraging monopolies

Which of the following is an example of a positive externality?

• Air pollution from factories

• Vaccination programs

• Traffic congestion

• Overfishing in public waters

Which of the following best describes a mixed economy?

• An economy with no government involvement

• An economy where only the government makes decisions

• An economy combining private and public sector roles

• An economy based solely on tradition

Which of the following is a reason why governments provide public goods?

• Public goods are always profitable for private firms

• Public goods are non-excludable and non-rivalrous, leading to under-provision by markets

• Public goods are always rivalrous

• Public goods are only needed in command economies

Suppose a factory emits pollution into a river, affecting nearby residents. What type of market failure does this represent?

• Monopoly power

• Negative externality

• Public good

• Price ceiling

A government imposes a tax on companies that produce carbon emissions. What is the primary purpose of this intervention?

• To increase company profits

• To internalize the external cost of pollution

• To subsidize polluting industries

• To eliminate all market competition