Question

quiz 2 - economic systems
do not write on this paper
(directions: for #1 - 5, match the correct letter with each of the statements. each letter may be used
more than once.)
a. traditional b. command c. market

1. this system is often associated with \laissez - faire\ capitalism.
2. in this system, the government or state plays an active role in the economy.
3. in this system, the goal is for government to redistribute the wealth equally to all the people.
4. in this system, everyones roles are clearly defined
5. competition between firms plays an important role in the economy.
6. the united states is more associated with this system.
7. communist countries are more associated with this system.
8. custom and habits that have been a part of the society is very important for this system.
9. countries that have dictators are often associated with this system
10. the profit motive and the desire to make money is often associated with this system.

(directions: for #11 - 15, identify the most correct letter for each question. there is only one correct answer.)

1. which of the following is not a basic economic question: a) what g & s is produced, b) what is the

price of the g & s?, c) how will the g & s be produced?, d) who will get the g & s?, e) how much g & s
will be produced?

1. which of the following is not associated with the united states: a) command system, b) capitalism, c)

laissez - faire, market economy

1. which of the following is a goal of communism: a) competition between business, b) profit motive, c)

role of custom, habit and tradition, d) equal distribution of wealth.

1. the concepts of supply and demand, and the interaction between buyers and sellers is more associated

with: a) command system, b) market system, c) traditional system, d) none of these

1. the concept of \economic freedom\ is most associated with what system: a) traditional, b) command,

market, d) none of these

Explanation:

1. Laissez - faire Capitalism: This is a key concept of the market system (C). Laissez - faire means minimal government intervention, which is characteristic of a market economy where supply and demand (and competition between firms) drive economic activity.
2. Government's active role: In a command system (B), the government makes most economic decisions such as what to produce, how to produce, and for whom to produce.
3. Wealth redistribution: Command systems (B) often have the goal of more equal distribution of resources, as the government controls the means of production and distribution.
4. Defined roles: In a traditional system (A), roles are often defined by custom, habit, and tradition (e.g., in a feudal - like or tribal economic setup).
5. Competition between firms: This is a hallmark of the market system (C). Firms compete to sell goods and services, which affects prices, production levels, etc.
6. US association: The US has a market - based economy (C) with elements of capitalism and relatively free markets.
7. Communist countries: Communist countries historically have had command systems (B) where the state controls the economy.
8. Custom and habits: Traditional systems (A) rely on long - standing customs and habits for economic decision - making (e.g., what crops to grow based on ancestral practices).
9. Dictators and systems: Dictators often control the economy in a command - like way (B), making decisions for the whole economy.
10. Profit motive: The profit motive is central to the market system (C), where firms seek to maximize profits.

1. Basic Economic Questions: The basic economic questions are what to produce, how to produce, for whom to produce, and how much to produce. The price of goods and services (b) is determined by market forces (in a market system) or set by the government (in a command system) but is not one of the fundamental questions. So the answer is b.
2. US association: The US is associated with capitalism (a form of market economy) and laissez - faire (to some extent). It is not a command system (a). So the answer is a.
3. Goal of Communism: Communism aims for equal distribution of wealth (d). Competition (a) and profit motive (b) are more market - related, and custom (c) is traditional.
4. Supply and demand: Supply and demand and buyer - seller interaction are key in a market system (b). In a command system, the government decides, and in a traditional system, custom does.
5. Economic freedom: Economic freedom (like freedom to start a business, make production decisions) is most associated with the market system (c). In a traditional system, there is less freedom as it is bound by custom, and in a command system, the government restricts freedom.

Answer:

1. C
2. B
3. B
4. A
5. C
6. C
7. B
8. A
9. B
10. C
11. b
12. a
13. d
14. b
15. c