section 2
a. key terms and concepts
directions: match each item with one of the descriptions below.
____ 1. an individual’s personal gain
____ 2. an arrangement for buyers and sellers to exchange things
____ 3. where firms purchase the factors of production
____ 4. a hope of reward that encourages someone to behave in a certain way
____ 5. consumers have power over what is produced
____ 6. producing only what you are good at
a. consumer sovereignty
b. factor market
c. specialization
d. incentive
e. market
f. self - interest
b. main ideas
directions: write the letter of the correct answer in the blank provided.
____ 7. why do people need to buy and sell goods or services?
a. people need to make a profit.
b. people need a competitive society.
c. no one is completely independent.
d. people need to provide the market with goods.
____ 8. who owns the factors of production?
a. individuals
b. households
c. firms
d. the market
____ 9. what “invisible hand” directs the free market?
a. incentives and efficiency
b. specialization
c. circular flow
d. competition
____ 10. why are free market economies able to grow?
a. consumers can buy all needed goods.
b. competition encourages innovation.
c. everyone acts in their own interest.
d. firms keep producing incentives.
© by pearson education, inc., or its affiliates. all rights reserved.
67

Question

section 2
a. key terms and concepts
directions: match each item with one of the descriptions below.
____ 1. an individual’s personal gain
____ 2. an arrangement for buyers and sellers to exchange things
____ 3. where firms purchase the factors of production
____ 4. a hope of reward that encourages someone to behave in a certain way
____ 5. consumers have power over what is produced
____ 6. producing only what you are good at
    a. consumer sovereignty
    b. factor market
    c. specialization
    d. incentive
    e. market
    f. self - interest
b. main ideas
directions: write the letter of the correct answer in the blank provided.
____ 7. why do people need to buy and sell goods or services?
    a. people need to make a profit.
    b. people need a competitive society.
    c. no one is completely independent.
    d. people need to provide the market with goods.
____ 8. who owns the factors of production?
    a. individuals
    b. households
    c. firms
    d. the market
____ 9. what “invisible hand” directs the free market?
    a. incentives and efficiency
    b. specialization
    c. circular flow
    d. competition
____ 10. why are free market economies able to grow?
    a. consumers can buy all needed goods.
    b. competition encourages innovation.
    c. everyone acts in their own interest.
    d. firms keep producing incentives.
© by pearson education, inc., or its affiliates. all rights reserved.
67

Accepted Answer

### Part A: Matching Key Terms and Concepts
#### 1. an individual’s personal gain
# Brief Explanations:
"Self - interest" refers to the personal gain or benefit that an individual seeks. So this matches with f. self - interest.
# Answer:
f. self - interest

#### 2. an arrangement for buyers and sellers to exchange things
# Brief Explanations:
A "market" is defined as a place (physical or virtual) where buyers and sellers come together to exchange goods, services, or resources. So this matches with e. market.
# Answer:
e. market

#### 3. where firms purchase the factors of production
# Brief Explanations:
A "factor market" is the market where firms buy the factors of production (like labor, capital, land, etc.). So this matches with b. factor market.
# Answer:
b. factor market

#### 4. a hope of reward that encourages someone to behave in a certain way
# Brief Explanations:
An "incentive" is something that motivates or encourages a person to act in a particular way, usually with the hope of a reward. So this matches with d. incentive.
# Answer:
d. incentive

#### 5. consumers have power over what is produced
# Brief Explanations:
"Consumer sovereignty" is the concept that consumers, through their buying decisions, have the power to determine what goods and services are produced. So this matches with a. consumer sovereignty.
# Answer:
a. consumer sovereignty

#### 6. producing only what you are good at
# Brief Explanations:
"Specialization" is the practice of focusing on producing a particular good or service in which one has a comparative advantage (being good at producing it). So this matches with c. specialization.
# Answer:
c. specialization

### Part B: Main Ideas (Multiple - Choice)
#### 7. Why do people need to buy and sell goods or services?
# Brief Explanations:
No one is completely self - sufficient. People have different skills, resources, and needs. So they need to buy and sell to get the goods and services they can't produce themselves. Option a is about making a profit (more relevant to businesses), option b is about a competitive society (not the main reason for buying and selling), option d is about providing the market (not the reason for individuals to buy and sell). So the correct answer is c. No one is completely independent.
# Answer:
c. No one is completely independent.

#### 8. Who owns the factors of production?
# Brief Explanations:
Households own the factors of production. Households supply labor (workers), land (owners of land), and capital (savers or investors) to firms in the factor market. Individuals are part of households, firms are the buyers of factors of production, and the market is a place of exchange, not the owner. So the correct answer is b. households.
# Answer:
b. households

#### 9. What “invisible hand” directs the free market?
# Brief Explanations:
In a free market, the "invisible hand" is related to how self - interest and competition work together. But more specifically, it is the combination of incentives and efficiency that guide the market. However, among the options, competition is a key driver. Wait, actually, the invisible hand is about how individuals pursuing their self - interest end up promoting the social interest. But among the given options, competition is a major force. Wait, the correct option here is d. competition? No, wait, the invisible hand is guided by self - interest, but the option related to the mechanism is competition? Wait, no, the correct answer is d. competition? Wait, no, the invisible hand is the idea that in a free market, the actions of self - interested individuals lead to an efficient allocation of resources, and competition is a part of that. So the correct answer is d. competition? Wait, no, the options: a. Incentives and efficiency - no. b. specialization - no. c. circular flow - no. d. competition. Yes, competition is a key element that drives the invisible hand as firms compete for customers and resources. So the correct answer is d. competition.
# Answer:
d. competition

#### 10. Why are free market economies able to grow?
# Brief Explanations:
In a free market economy, competition encourages firms to innovate. They need to come up with better products, more efficient production methods to stay competitive. Option a: Consumers can't buy all needed goods (they buy what they can afford and what is available). Option c: Acting in self - interest alone doesn't guarantee growth. Option d: Firms producing incentives - no, incentives are for behavior, not the reason for growth. So the correct answer is b. Competition encourages innovation.
# Answer:
b. Competition encourages innovation.

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QUESTION IMAGE

Question

Explanation:

Part A: Matching Key Terms and Concepts

1. an individual’s personal gain

Answer:

2. an arrangement for buyers and sellers to exchange things