Economic Systems and Comparative Advantage Quiz

Capitalism relies on market forces, such as supply and demand, to determine resource allocation.

In a command economy, decisions about production are typically made by government authorities.

The primary goal of a centrally planned economy is to achieve economic equality through centralized decision-making.

A mixed economy combines elements of both capitalism and socialism, incorporating private and public ownership.

Prices in a market economy are determined by the forces of supply and demand.

A key feature of a traditional economic system is the presence of rigid social roles and customs.

Comparative advantage refers to a country's ability to produce a good or service with a lower opportunity cost than another country.

A disadvantage of a free-market economic system is the potential for inefficient allocation of resources without government intervention.

Specializing according to comparative advantage in international trade leads to increased efficiency and overall global output.

Cultural preferences do not typically affect a country's comparative advantage in international trade.

The concept of comparative advantage was introduced by the economist David Ricardo.

Socialism emphasizes collective ownership of the means of production and distribution.

Capitalism is characterized by private ownership of resources and minimal government intervention in economic affairs.

The idea of the invisible hand in market economies is associated with the economist Adam Smith.

In capitalism, the government plays a minimal role in resource allocation, allowing market forces to largely determine economic outcomes.