Questions for economic reasoning and discussion

1. How do different economic systems solve the problem of scarcity? _______________________

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2. The “profit motive” is sometimes said to be the most fundamental feature of a market system. What do you suppose is meant by the “profit motive”? _________________________________

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3. If no pure market economy exists and no pure command economy exists, why does economics deal with these concepts? ___________________________________________________________

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4. List some ways in which your country's economic system functions as a free market.

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5. List some ways in which your country's economic system functions as a planned economy.

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6. Choose the right variant. In some tasks more than one is possible.

1. Which of the following best describes the three fundamental economic questions?

1. What to produce, when to produce, and for whom to produce.

2. What to produce, when to produce, and where to produce.

3. What time to produce, what place to produce, and how to produce.

4. What to produce, how to produce, and for whom to produce.

5. What do corporations want, how can corporations control government, and for whom is the land despoiled.

2. In a command economy, the use of resources is determined by

1. public ownership and private sector decision making.

2. private ownership and government decision making.

3. private ownership and private sector decision making.

4. public ownership and government decision making.

3. Choose the main characteristics of a command economy.

1. There is little technology.

2. Businesses are not run for profit.

3. Individual profit is the primary motivator.

4. There is little or no competition.

5. The government controls the means of production and distribution.

6. The government makes all economic decisions.

4. To a supporter of a free enterprise economic system, the factors of production are put to best use when controlled by:

1. private individuals

2. labour unions

3. public officials

4. foreign investors

5. Choose the main characteristics of a market economy.

1. There is a competition for business.

2. Making money is the primary motivator.

3. People can own their own property and go into business for themselves.

4. There is little technology.

5. The government makes all economic decisions.

6. Businesses are privately owned.

6. A market exists

1. where consumers express their needs and wants.

2. when products are advertised.

3. where merchants build shops.

4. where buyers and sellers exchange goods and services

7. Which of the following statements is incorrect regarding the free market systems?

1. Private property does not exist.

2. Innovation and entrepreneurship are central to free market systems.

3. Some economic activity is not determined by the price mechanism and is provided by the government in the form of public goods.

8. The special role of the profit motive in a market economy is that it

1. drives sellers to produce what buyers want.

2. results in high prices.

3. discourages people from taking risks.

4. keeps people from going into business.

9. In a mixed economy, economic decisions regarding scarcity and factors of production are made by the

1. corporations and labour sector.

2. private sector.

3. public sector.

4. public and private sectors.

10. A mixed economy is best described by the statement:

1. In a mixed economy, society answers the “what”, “how”, and “or whom' questions through a market system.

2. In a mixed economy, government policies determine the “what”, “how”, and “for whom” questions.

3. In a mixed economy, the government and the private sectors interact in solving the basic economic questions.

4. In a mixed economy, the invisible hand solves the basic economic questions.

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