| A | B |
|---|
| What type of economic system is exemplified by Adam Smith's "Invisible hand" theory? | free market (capitalism) |
| Which economic system allows producers and consumers to make their own choices through voluntary exchange? | free market (capitalism) |
| Which economic system is characterized by competition between producers and consumers? | free market (capitalism) |
| Which economic system is centrally planned by government agencies? | Command (Communism) |
| Who owns the property and factors of production in a free market economy? | individuals and businesses |
| In a command/socialist economy, who gets to make the most important economic decisions? | government |
| What is the primary goal of individuals and businesses in a free-market economy? | profit |
| According to the law of demand, what will consumers do when price falls? | buy more |
| According to the law of supply, what will producers do when price rises? | supply more |
| What is the economic effect of price controls? | shortages |
| What will happen to price if there is a shortage of a product? | it will rise |
| What will happen to price if there is a surplus of a product? | it will fall |
| Which economic principle states that consumers will buy more of a good at a lower price than at a higher price? | law of demand |
| Which economic principle states that producers will increase their output of a good or service when the price is higher? | law of supply |
| In a free market economy, who makes the decisions on the most basic economic questions? | individuals and businesses |
| What is the price called at which quantity supplied is equal to the quantity demanded? | market price or equilibrium price |
| What will happen to the market price of a good if personal income of consumers rises? | it will rise |
| What will happen to the market price of a good if a complementary good rises in price? | it will fall |
| What will happen to the price of a good if a substitue for it becomes cheaper? | it will fall |
| What term is used to describe the lowest wage that employers are legally allowed to pay an employee? | minimum wage |
| What characteristic of the free market system gives individuals the "freedom to choose"? | free enterprise |
| How is private property protected in a free market system? | patents/copyrights |
| What force coordinates the actions of buyers and sellers in a free market economy? | the "Invisible Hand" (self-interest or profit motive) |
| Which economic system typically has an extensive welfare system and government control over the major industries like health care? | Socialism |
