Worksheets2.9 Market economic system
Total questions: 38
Worksheet time: 38mins
Which is not a basic principle of a market system
competition
voluntary exchange
socialism
self-interest
Which of the following does not follow with the basic principles of market systems?
People are driven by their desire to make a profit
competition is discouraged
people feel best when they freely trade for what they want
innovation is encouraged
Private property rights
Should not be enforced by the government
Are protected by the government
Do not exist in capitalist markets
Are optional for success in the market
What do businesses generally do when demand for a product decreases?
Decrease the price
Increase the price
Keep the price the same
Produce more
In a free market, one can expect a company to charge the highest possible prices they can to make the most money due to
Competition
Voluntary exchange
The Profit motive
The existence of Private property
All of the following contribute to a free market system except
Economic freedom
Competition
Self-Interest
Government ownership
Which broad social goal is important in a market system but not as important in a centrally-planned (command) one?
Equity
Efficiency
Security
Stability
Which actions would a coffee producer most likely take in response to a increase in the price it can charge for coffee
Produce more coffee
Produce less coffee
Do nothing
None of the above
Which economic system relies solely on the government to produce and distribute goods and services?
Market
Centrally-planned (command)
Capitalism
Mixed
What is a benefit of the market system?
Competition ensures choice for consumers.
Prices equal supply costs
Unemployment is kept to a minimum
Wage differentials are small
What is an advantage of a market economy?
an absence of poverty
Consumer sovereignty
Full employment
firms have monopoly power
In a market system, what encourages firms to keep their costs low?
Competition
Subsidies
Taxation
Rules and Regulations
What encourages firms to produce what consumers demand?
the desire to keep revenue low
the chance to make high profit
the chance to keep cost of production high
the desire to attract firms in the industry
Who decide what to produce, how to produce and for whom to produce?
government
producers
consumers
producers and consumers
A market economic system is one where resources are owned and controlled by private sector
False
True
In a market economy, there is limited government intervention.
True
False
There are four types of economic systems. Most economies are _____.
Traditional
Command
Market
Mixed
Using all available resources an economy produces different combinations of two types of good, clothes and food, shown on the production possibility curve (PPC) diagram. What does the PPC indicate?
It is more efficient to produce more of clothes than food.
It is only possible to increase the output of clothes by reducing the output of food.
The best situation is to produce equal units of clothes and food.
The cost of producing a unit of clothes is always higher than the cost of producing a unit of
food.
A government subsidised a new factory in a rural area to create jobs. It also provided training courses at a college. Objectors claimed the development would destroy an area of natural beauty. What concepts are involved in this statement?
economic growth, resource allocation, free market equilibrium
government intervention, monetary policy, opportunity cost
public good, market prices, fiscal policy
supply-side policy, negative externalities, factors of production
Reena makes a living by selling paintings of the town in which she lives. She sells them in an open-air market once a week. In order to be able to sell more pictures in a week she decides to buy a studio, pay someone to help in the studio and try to increase demand by advertising in the local paper.
Which factors of production were changed?
capital only
labour and capital
labour and land
labour only
A market consists of 10 individuals with different demand curves in a given period. What is a calculation that could be used as part of the process to determine the market equilibrium
in that period?
at each price add the quantities demanded by each individual
at each quantity average the price that each individual is prepared to pay
combine the price elasticity of demand (PED) and the price elasticity of supply (PES) at each price
determine the PED and multiply it by the quantity demanded
The diagram shows the market for a good. The equilibrium is at point X. The government fixes a minimum price for the good at P2. What will happen in the market as a result?
The market equilibrium will remain the same.
The quantity demanded will rise to Q2.
The quantity supplied will fall to Q3.
There will be an excess supply.
How might the concept of price elasticity of demand (PED) be useful for a government?
to determine the effect on employment of a change in income tax
to determine the effect on government revenue of a rise in the rate of interest
to determine the effect of providing a public good
to determine the result of imposing a tariff on imports
