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The Free Market

Total questions: 81

Worksheet time: 1hrs 2mins

Name
Class
Date
1.
The USA has a ______market, meaning we have the right to choose what and what not to buy.
a)
free
b)
rich
c)
low
d)
high
2.
The government collects_______ from goods and services, to provide citizens what they need.
a)
children
b)
supply
c)
demand
d)
taxes
3.
When supply is low, the demand is usually_____
a)
low
b)
high
c)
sad
d)
money
4.
As you get ready to purchase an item, you must make good ______________.
a)
laws
b)
taxes
c)
decisions
d)
supply
5.
When the supply is too high, prices tend to________.
a)
increase
b)
decrease
c)
pay
d)
market
6.
In a free market, people are allowed to decide what to sell and _________
a)
when to eat it
b)
for what price
c)
take it to their moms
d)
for what to dance to
7.
The total amount of a good or service that is available to buy is called
a)
demand
b)
incentive
c)
profit
d)
supply
8.
A(n) ______________is something that leads a person to make a certain choice.
a)
demand
b)
incentive
c)
profit
d)
supply
9.
The total amount of a good or service that customers will buy at all prices is called
a)
demand
b)
incentive
c)
profit
d)
supply
10.
The amount of money earned by a business after costs are removed is called
a)
demand
b)
incentive
c)
profit
d)
supply
11.
Which of the following people is earning money by providing a service?
a)
Anthony grows fruit to sell
b)
Laura sews stuffed animals
c)
Carl sells lemonade he makes
d)
Marie teaches a third grade class
12.
Which of the following will increase the profit at a lemonade stand?
a)
using cheaper lemons
b)
using more ingredients
c)
selling during cold weather
d)
giving glasses away for free
13.
At Georgia's fruit stand, she sells apples. The __________ of apples is how many she has to sell.
a)
buyer
b)
demand
c)
seller
d)
supply
14.
Oprah and Bill Gates are entrepreneurs because they
a)
watched television all day long
b)
spent all their time on the internet
c)
grew fruits and vegetables to sell
d)
took risks to start their own businesses
15.
A new toy becomes very popular, and many people want it.  How will the price of the toy change?
a)
price will go up
b)
price will go down
16.
A new bakery moves into the neighborhood.  Now there are many more cookies that people can buy.  How will the price of cookies change>
a)
price will go up
b)
price will go down
17.
Cold weather in Florida kills many trees that grow oranges.  How will the price of oranges change?
a)
Price will go up
b)
Price will go down
18.
Julie sells hot chocolate during the winter.  But  this winter has been very warm.  How will the price of hot chocolate change?
a)
Price will go up
b)
Price will go down
19.
One company charges a high price to ship mail quickly.  Soon many other companies start shipping mail just as quickly.  How will the price of this service change?
a)
Price will go up
b)
Price will go down
20.

Which of the following does not follow with the basic principles of market systems?

a)

People are driven by their desire to make a profit

b)

competition is discouraged

c)

people feel best when they freely trade for what they want

d)

innovation is encouraged

21.
Private property rights
a)
Should not be enforced by the government
b)
Are protected under the constitution
c)
Do not exist in capitalist markets
d)
Are optional for success in the market
22.
Which type of market structure has the fewest barriers to entry?
a)
Perfect competition
b)
Monopolistic comptition
c)
Oligopoly
d)
Monopoly
23.
Which type of market structure has the fewest amount of competitors in the market?
a)
Perfect comptetition
b)
Monopolistic competition
c)
Oligopoly
d)
Monopoly
24.
The law of demand states
a)
when prices rise, the amount people will buy will rise
b)
when prices rise, the amount people will buy will decrease
c)
when prices rise, the amount people will sell will rise
d)
when prices rise, the amount people will sell will decrease
25.
The law of supply states
a)
When prices rise, producers will want to produce more
b)
When prices rise, producers will want to produce less
c)
When producers producer more, they expect to make less money
d)
When producers producer less they expect to make more money
26.
Equilibrium is
a)
The point at which there is a shortage of a good or service
b)
The point at which there is surplus of a good or service
c)
The point at which the amount people are buying at a certain price is equal to that which people are selling
d)
The point at which people are buying are as high as possible and the sellers are selling for equal prices so there is choice
27.

What do businesses generally do when demand for a product decreases?

a)

Decrease the price

b)

Increase the price

c)

Keep the price the same

d)

Produce more

28.
According to the principles of supply and demand, if the price of Coke rises we would expect that
a)
People will buy more Coke
b)
Producers will produce less Coke
c)
People will buy more Pepsi
d)
Producers will produce less Pepsi
29.
If the cost of labor to make steel increases, according to the laws of supply and demand the supply for steel would
a)
increase
b)
decrease
c)
stay the same but demand would increase
d)
stay the same but demand would decrease
30.

In a free market, one can expect both the buyer and seller to be better off after they have made a transaction due to the concept of

a)

Competition

b)

Voluntary exchange

c)

Profit motive

d)

Self-interest

31.

In a free market, one can expect a company to charge the highest possible prices they can to make the most money due to the concept of

a)

Competition

b)

Voluntary exchange

c)

Profit motive

d)

Private property

32.

All of the following contribute to a free market system except

a)

Economic freedom

b)

Competition

c)

Self-Interest

d)

Government ownership

33.

Which broad social goal is important in a market system but not as important in a centrally-planned (command) one?

a)

Equity

b)

Efficiency

c)

Security

d)

Stability

34.

Which economic system relies solely on the government to produce and distribute goods and services?

a)

Market

b)

Centrally-planned (command)

c)

Capitalism

d)

Mixed

35.

What is Free Market?

a)

an economy where people can buy and share stocks

b)

an economic system in which decisions are based on voluntary exchange in markets

c)

an economic system in which trees grow upward

d)

an economic system in which Ms. Webster is awesome

36.

What are self-regulated markets?

a)

an economic system where snap chat is a texting base

b)

an economic system where you can text in school

c)

a kind of market in which the government has no control, buyers and sellers control it

d)

an economic system in which the government controls the entire market

37.

How does competition work?

a)

companies compete with other companies to sell their goods at the best price

b)

when buyers compete with other companies to buy goods at the best price

c)

when you find out the snap chat is bad for you

d)

when you find out that Facebook is bad for you it will hit you right on the noggin

38.

What are examples of economic incentives?

a)

remodeling a home

b)

paying taxes

c)

completing homework

d)

Subsidies for pollution control, emissions taxes, fees, etc

39.

What are the advantages of a Free Market Economy?

a)

total government control

b)

Frank has complete control over the U.S. economy

c)

innovation, freedom of production, and competition (good for consumers)

d)

the economy is free to regulate itself and monopolies control businesses

40.
This is the social & political commitment & freedom to start their own businesses & compete
a)
free enterprise system
b)
free response system
c)
free travel system
d)
freedom of choice
41.
The driving force behind people going into business is
a)
profit margin
b)
profit motive
c)
opportunity cost
d)
taxes
42.
This concept insures that everyone can compete in the marketplace by opening a business:
a)
profit incentive
b)
legal equality
c)
open opportunity
d)
open market
43.
The concept of giving everyone the same legal rights, equal protections & due process of law.
a)
profit incentive
b)
legal equality
c)
open opportunity
d)
open market
44.
The concept that people have the right and privilege to control their possessions as they wish.
a)
legal equality
b)
open opportunity
c)
private property
d)
profit incentive
45.
The concept that people may decide what and when they want to buy and sell goods & services
a)
voluntary exchange
b)
legal equality
c)
private property
d)
open opportunity
46.
A situation where the market does not distribute resources efficiently is
a)
a private sector problem
b)
a positive externality
c)
a negative externality 
d)
a market failure
47.
True/False:  Government safety nets are called welfare or aid to the poor.
a)
True
b)
False
48.
The income level that is needed to support a household is
a)
the poverty threshold
b)
the standard of living
c)
a cash transfer
d)
an in-kind benefit
49.

What might happen if the demand for a new type of sneaker began rising quickly?

a)

The manufacturer would begin making fewer sneakers

b)

The sneaker company would raise the price of the sneakers

c)

People would refuse to pay more money for the sneakers

d)

The sneaker company would lower the price of the sneakers

50.

What is likely to happen if the price of a new pair of sneakers went up?

a)

Demand for the sneakers would increase

b)

Demand for the sneakers would decrease

c)

Merchants would begin offering sales on the sneakers

d)

It would be impossible to find a pair in stores

51.

What factor is most likely to cause an increase in demand for a new type of automobile?

a)

A commercial in which the car is endorsed by a popular celebrity

b)

A comedian making fun of the car on late-night TV

c)

A rumor that the car's gas tank is prone to explosion

d)

The price of the car going up

52.

Which condition would lead to the highest prices?

a)

Low supply, high demand

b)

High supply, high demand

c)

High supply, low demand

d)

Low supply, low demand

53.
When the supply of a product or service goes up and the demand stays the same the Price will typically do what? 
a)
rise
b)
fall
c)
stay the same
d)
Consumer
54.
The desire or willingness a consumer has to purchase a good or a service is called?
a)
shortage
b)
supply
c)
price
d)
demand
55.
The amount of goods or services available is called?
a)
supply
b)
demand
c)
producer
d)
consumer
56.
The week before Halloween, pumpkin patches all around the country sell lots of pumpkins. What will happen to the price of pumpkins on the day after Halloween?
a)
The price will go up.
b)
The price will go down.
57.
The new Star Wars movie is coming out today!  All of the shows are sold out, but your neighbor is selling his tickets because he can't go.  A lot of people in your neighborhood want to buy the tickets.  What will happen to the price of the tickets?
a)
The price will go up.
b)
The price will go down.
58.

According to the laws of supply and demand, when will companies produce more of a product?

a)

When the price people will pay for it goes down

b)

When demand decreases

c)

When they can sell it for a higher price

d)

When the economy turns downward

59.

A drought has made this year's tomato harvest smaller than usual. What will probably happen to the overall supply of tomato sauce?

a)

The supply will probably go up

b)

The supply will probably go down

60.
There is only one gas station on a stretch of highway. Then two more gas stations open next to the first. Demand for gas does not change during this time. What will happen to the price of gas on this stretch of highway and why?
a)
The price of gas will decrease because there is more competition among businesses.
b)
The price of gas will decrease because there is less competition among businesses.
c)
The price of gas will increase because there is more competition among businesses.
d)
The price of gas will increase because there is less competition among businesses.
61.
This social class grew during the Industrial Revolution. 
a)
Lower Class
b)
Middle Class
c)
Upper Class
d)
None grew
62.
Laissez-faire means...
a)
natural rights
b)
iron law of wages
c)
let it happen
d)
tabula rasa
63.
Who developed laissez-faire economics as a en economic philosophy? 
a)
Adam Smith
b)
Karl Marx
c)
John Locke
d)
Louis XVI
64.
Adam Smith attacked this economic theory that meant one's power was based on one's wealth...
a)
Capitalism
b)
Socialism
c)
Mercantilism
d)
Communism 
65.
Smith believed that the economy operated according to three natural laws involving this concept...
a)
self-interest
b)
compassion
c)
citizenship
d)
trustworthiness 
66.

Adam Smith would most likely agree with which statement?

a)

Revolution is the only solution to economic problems.

b)

Five-year plans are necessary in order to industrialize.

c)

All nations would benefit from an agricultural economy.

d)

Government should follow a laissez-faire policy.

67.

Laissez-faire capitalism as attributed to Adam Smith called for

a)

heavy taxation of manufacturers

b)

strict government control of the economy

c)

minimal government involvement in the economy

d)

government investments in major industries

68.

Adam Smith’s Wealth of Nations stressed the importance of

a)

tradition

b)

supply and demand

c)

large corporations

d)

government ownership

69.

Karl Marx and Friedrich Engels encouraged workers to improve their lives by

a)

electing union representatives

b)

participating in local government

c)

overthrowing the capitalist system

d)

demanding pensions and disability insurance

70.
Scottish Professor who believed that the successful market economy is based on competition.
a)
Adam Smith
b)
Bourgeoisie
c)
Capital
d)
Capitalism
71.
The capitalist class who own most of society's wealth and means of production.
a)
Adam Smith
b)
Bourgeoisie
c)
Capital
d)
Capitalism
72.
Wealth in the form of money or other assets owned by a person or organization.
a)
Adam Smith
b)
Bourgeoisie
c)
Capital
d)
Capitalism
73.

An economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state (government).

a)

Adam Smith

b)

Bourgeoisie

c)

Capital

d)

Capitalism

74.

A political theory derived from Karl Marx, advocating class war and leading to a society in which all property is publicly owned and each person works and is paid according to their abilities and needs.

a)

Communism

b)

Free enterprise system

c)

Karl Marx

d)

Law of competition

75.
A policy or attitude of letting things take their own course, without interfering.
a)
Laissez-faire
b)
Law of supply and demand
c)
Proletariat
d)
Socialism
76.
Workers or working class people.
a)
Laissez-faire
b)
Law of supply and demand
c)
Proletariat
d)
Socialism
77.

According to Karl Marx, the history of all societies is a struggle between what?

a)

religions

b)

countries

c)

economic classes

d)

race

78.
How would you summarize this quote: "As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it."
a)
In conclusion, each person makes the most of his own work, and without realizing it helps others. What is good for the society, also happens to be good for individuals
b)
In conclusion, each person should focus on his own work and give his yearly salary to the public 
79.
How would you summarize this key point? "The property which every man has in his own labor, as it is the original foundation of all other property, so it is the most sacred and inviolable. The patrimony of a poor man lies in the strength and dexterity of his hands; and to hinder him from employing this strength and dexterity in what manner he thinks proper without injury to his neighbor, is a plain violation of this most sacred property."
a)
A person's ability to work is the foundation of all other property. It is a freedom that should be highly protected. 
b)
A poor man should be allowed to work with his hands but with sacred guidance from neighbors.
80.
Review this quote: "...he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.  What is meant by the invisible hand?
a)
An actual invisible hand guides economic outcomes, and freedom is created. 
b)
The invisible hand is a metaphor or a symbol of "market forces" in the free-market system.  These market forces lead to good outcomes without any central planning. 
81.
Adam Smith wrote the The Wealth of Nations during the same year the Declaration of Independence was written, as well as, the start of the American Revolution. Which statement is accurate?
a)
In 1776, many English and North American citizens wanted more government intervention in their lives. 
b)
In 1776, many English and North American citizens wanted freedom from government intervention. 

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