SOL 12 Review

In a free enterprise system, what determines prices?

• The government

• Supply and demand

• Consumers

• Businesses

What is another term for a free enterprise system?

• Socialism

• Capitalism

• Communism

• Feudalism

What is the role of the government in a limited government system?

• Control all businesses

• Enforce laws and protect property rights

• Set all prices

• Decide what goods are produced

How does democracy connect to free enterprise?

• Both systems rely on government control

• Both systems value individual choice and freedom

• Both systems eliminate competition

• Both systems focus on consumer sovereignty

Why is competition important in a free enterprise system?

• It eliminates consumer choice

• It ensures businesses offer the best products at reasonable prices

• It allows the government to control the economy

• It reduces the quality of goods and services

How does supply and demand affect prices in a free-market economy?

• Prices are set by the government

• Prices are determined by the interaction of supply and demand

• Prices remain constant regardless of supply and demand

• Prices are determined by consumer sovereignty alone

Explain how consumer sovereignty influences the production of goods in a free-market economy.

• Consumers directly control businesses

• Consumers’ purchasing choices determine what goods are produced

• Consumers rely on the government to decide what is produced

• Consumers eliminate competition through their choices

What is the definition of inflation?

• A decrease in prices over time

• A general rise in prices over time

• A reduction in the supply of goods

• An increase in the purchasing power of money

What does the Law of Supply state about sellers when prices go up?

• Sellers produce less

• Sellers produce more

• Sellers buy more

• Sellers stop producing

What happens to consumer prices when supply and demand change?

• Prices remain constant

• Prices adjust

• Prices decrease

• Prices increase