#1
Which of the following is a characteristic of a market economy?
Private ownership of property and resources
ExplanationOwnership by individuals fosters competition and innovation.
#2
Which of the following is NOT a characteristic of a market economy?
Central planning by the government
ExplanationMarket economies rely on decentralized decision-making.
#3
In a market economy, what is the role of the government?
To regulate certain aspects while allowing market forces to operate
ExplanationGovernment intervention aims to maintain fairness and stability.
#4
Which of the following best describes the role of entrepreneurs in a market economy?
To innovate, take risks, and create new businesses
ExplanationThey drive economic growth through innovation and risk-taking.
#5
Which of the following is a characteristic of a mixed economy?
Both government and private individuals play a role in economic decision-making
ExplanationBlending of market and planned economies.
#6
In a market economy, prices are primarily determined by:
Supply and demand
ExplanationPrices adjust based on the balance between what's available and what's wanted.
#7
What is the role of competition in a market economy?
To encourage innovation and efficiency
ExplanationCompetition drives companies to improve their products and services.
#8
Which economic concept suggests that individuals acting in their self-interest benefit society as a whole?
The invisible hand
ExplanationAdam Smith's metaphor for how self-interested actions can lead to positive outcomes for all.
#9
In a market economy, who determines what goods and services are produced?
Consumers
ExplanationConsumer demand guides production decisions.
#10
What term describes the total value of all goods and services produced in a market economy within a specific time period?
Gross Domestic Product (GDP)
ExplanationA measure of economic output and activity.
#11
In a market economy, what typically happens when demand for a product increases?
Prices increase
ExplanationHigher demand leads to scarcity, pushing prices up.
#12
What is a potential drawback of a market economy?
Inefficient allocation of resources
ExplanationMarket failures can lead to resources being misallocated.
#13
What economic term describes the idea that resources are limited but wants and needs are unlimited?
Scarcity
ExplanationFundamental to understanding economic choices.
#14
What is the term for the level of income at which a person or family can afford the basic necessities of life?
Absolute poverty
ExplanationA measure of extreme deprivation.
#15
What economic concept refers to the idea that individuals or firms can specialize in the production of goods and services in which they have a comparative advantage?
Comparative advantage
ExplanationBasis for international trade and specialization.
#16
What term describes the situation where there is only one buyer in a market?
Monopsony
ExplanationCan give the buyer significant influence over prices.