Understanding Economic Concepts Quiz

What is the term for an economic system in which private businesses operate in competition and largely free of state control?

• Command economy

• Free enterprise

• Socialism

• Traditional economy

Which term describes the ability of individuals to decide what agreements they want to enter into?

• Open opportunity

• Free contract

• Profit motive

• Market failure

What is the term for the incentive that drives individuals and businesses to improve their material well-being?

• Profit motive

• Subsidy

• Externality

• Safety net

Which concept refers to the situation when the market does not distribute resources efficiently on its own?

• Public goods

• Market failure

• Free rider

• Infrastructure

What is the term for goods or services provided by the government for free or at a reduced cost for everyone?

• Public goods

• Transfer payment

• Free contract

• Profit motive

Who is a person that benefits from a good or service without paying for it?

• Producer

• Free rider

• Consumer

• Entrepreneur

Which term refers to the basic physical and organizational structures needed for the operation of a society, such as roads and bridges?

• Externality

• Infrastructure

• Subsidy

• Safety net

What is the term for a side effect of an economic activity that affects other parties without being reflected in the cost of the goods or services involved?

• Externality

• Transfer payment

• Open opportunity

• Free contract

What is a government payment that supports a business or market called?

• Safety net

• Subsidy

• Profit motive

• Market failure

What is the term for government programs that help protect people from economic hardship?

• Safety net

• Free enterprise

• Open opportunity

• Infrastructure