WorksheetsChapter 3: The American Free Enterprise System
Total questions: 26
Worksheet time: 14mins
What is a Free Enterprise System?
Based on private ownership of private ownership of the factors of production
Based on public ownership of private ownership of the factors of production
Based on government ownership of private ownership of the factors of production
Based on public, private, and government ownership of private ownership of the factors of production
What is the ability of everyone to enter and compete in the marketplace
Free Choice
Open Opportunity
Private Property
Ownership
What is legal equity?
a situation in which everyone has no economic rights under the law.
a situation in which everyone has the different economic rights under the law.dif
a situation in which everyone has the similar economic rights under the law.
a situation in which everyone has the same economic rights under the law.
For voluntary exchange to work, people must be able to decide for themselves what legal agreements they want to enter into:
Expensive Agreement
Free Agreement
Free Contract
Expensive Contract
What is proft motive?
the incentive that discourages people and organizations to improve their material well-being by seeking to gain from economic activities.
the incentive that encourages people and organizations to improve their material well-being by seeking to gain from economic activities.
the incentive that encourages people and organizations to worsen their material well-being by seeking to gain from economic activities.
the incentive that encourages people and organizations to improve their material well-being by seeking to lose from economic activities.
True or False: Profit is the money left over after the costs of producing a product are added from the revenue gained by selling the product.
True
False
Mixed economies with some government protections, provisions, and regulations to adjust the free enterprise system are called what?
Free Enterprise economy
Modified Free Enterprise economy
Capitalist economy
Mixed economy
What is Market Failure?
If producers not part of the marketplace interaction benefit or pay part of the cost
If people part of the marketplace interaction benefit or pay part of the cost
If people not part of the marketplace interaction benefit or pay part of the cost
If producers part of the marketplace interaction benefit or pay part of the cost
True or False: When market failure occurs, the govt. sometimes provides goods/services
True
False
True or False: A free rider is a person who chooses not to pay for a good or service but who benefits from when it is provided.
True
False
What would be an example of a free rider service?
July 4th fireworks
Street lighting
National Defense
Law Enforcement
Who is in charge of the nation's infrastructure?
Public and Private Sectors
Government
Public Sectors
Private Sectors
What is an externality?
A side effect of a transaction that affects the producer or consumer.
A side effect of a transaction that affects someone other than the producer or consumer.
What is an externality that is a negative effect, or cost, for people not involved in the original economic activity
Positive externality
Negative externality
Externality
Neutral externality
What is an externality that has a positive effect, or benefit, for people not involved in the original economic activity
Neutral Externality
Negative externality
Externality
Positive externality
True or False: A safety net is government programs designed to protect people from economic hardships
Redistributing Income
True
False
What is an example of a Transfer Payment: transfers of income from one person or group to another even though the receiver does not provide any goods or services in return.
Cash from your birthday
Cash from labor
Inheritance from death
What is a public transfer payment?
a payment in which the government transfers income from taxpayers to recipients who do not provide anything in return
a payment in which the producers transfer income from taxpayers to recipients who do not provide anything in return
a payment in which the consumers transfer income from taxpayers to recipients who do not provide anything in return
a payment in which the producers and consumers transfer income from taxpayers to recipients who do not provide anything in return
Why is the United States considered to have a capitalist, or free enterprise, system?
The U.S economy, though based on the market system, is mixed. Government is an important element but its role is relatively limited. Mixed economies with some government protections, provisions, and regulations to adjust the free enterprise system
The U.S economy, though based on the market system, is a command economy. Government is an important element but its role is relatively limited. Command economies with some government protections, provisions, and regulations to adjust the free enterprise system
The U.S economy, though based on the market system, is traditional. Government is not an important element but its role is relatively limited. Traditional economies with some government protections, provisions, and regulations to adjust the free enterprise system
What are the legal rights that safeguard the free enterprise system?
most production decisions made in the marketplace through interactions of buyers/sellers
most production decisions made in the marketplace through interactions of government
How does profit motive and competition help make the free enterprise system work?
It encourages people and organizations to improve their material well-being by seeking to gain from economic activities.
It encourages people and organizations to worsen their material well-being by seeking to gain from economic activities.
How do consumers help determine the way resources are used?
When consumers choose to buy a product, they are “voting” for their choice against competing products. “Votes” help determine what will be produced in the future since producers, seeking profits.
Consumers are not involved.
How do producers help determine the way resources are used?
Producers, seeking profits, try to provide what consumers want.
Producers, seeking profits, do not try to provide what consumers want.
True or False: one role of government in the U.S economy is to address market failures.
True
False
Why do governments provide public goods and infrastructure?
Market Failure
Market Success
Why do governments seek to decrease negative externalities and increase positive externalities?
Limiting negative externalities is one important role of the govt. in the American economy because it is a negative effect, or cost, for people involved in the original economic activity
Limiting negative externalities is one important role of the govt. in the American economy because it is a positive effect, or cost, for people not involved in the original economic activity
Limiting negative externalities is one important role of the govt. in the American economy because it is a negative effect, or cost, for people not involved in the original economic activity
Limiting negative externalities is one important role of the govt. in the American economy because it is a positive effect, or cost, for people involved in the original economic activity
