Understanding Economic Systems

What are the three fundamental questions that an economic system answers?

• What is the demand, what is the supply, and what is the price?

• Who makes the laws, who enforces them, and who benefits?

• What do we produce, how do we produce it, and who receives it?

• How much does it cost, who will buy it, and where is it sold?

In a market economy, what primarily determines the production of goods and services?

• Government regulations

• Environmental policies

• Consumer purchasing patterns

• International trade agreements

Which of the following is a disadvantage of a market economy?

• Limited innovation

• Monopolies can form

• Lack of consumer choices

• High levels of government intervention

What is a key feature of a command economy?

• Private ownership of all resources

• Government determines production and prices

• Consumer-driven production

• Free market competition

Which of the following is an advantage of a command economy?

• Low unemployment levels

• Abundant consumer choices

• Efficient resource allocation

• High levels of innovation

What is a common disadvantage of command economies?

• High levels of inequality

• Rapid market fluctuations

• Excessive competition

• Inefficiency in production

In a mixed economy, which sectors are typically under government control?

• Luxury goods and entertainment

• National defense and public transportation

• Retail and hospitality

• Technology and innovation

How can a mixed economy emerge from a market economy?

• By reducing taxes on private enterprises

• By introducing state-owned enterprises and regulations

• By eliminating all forms of government intervention

• By increasing international trade

What is a key factor that influences whether a country adopts a market or command economy?

• Political ideology

• Climate conditions

• Geographic location

• Cultural background

Why is there no single 'best' economic system for all countries?

• Because all countries have the same economic needs

• Due to differences in cultural, social, and economic factors

• Due to the uniformity of political systems worldwide

• Because market economies are universally superior