The Market System

Which is not a basic principle of a market system

• competition

• voluntary exchange

• socialism

• self-interest

Which of the following does not follow with the basic principles of market systems?

• People are driven by their desire to make a profit

• competition is discouraged

• people feel best when they freely trade for what they want

• innovation is encouraged

Private property rights

• Should not be enforced by the government
• Are protected under the constitution
• Do not exist in capitalist markets
• Are optional for success in the market

Which type of market structure has the fewest barriers to entry?

• Perfect competition
• Monopolistic comptition
• Oligopoly
• Monopoly

Which type of market structure has the fewest amount of competitors in the market?

• Perfect comptetition
• Monopolistic competition
• Oligopoly
• Monopoly

Oligopolies have all of the following characteristics except

• A small number of competitors
• Make it difficult for others to enter the market
• A relatively similar product
• Complete control of the market

The following conditions are needed for perfect competition except?

• Same product
• Lack of barriers to enter market
• Many sellers
• Variable pricing mechanisms

The law of demand states

• when prices rise, the amount people will buy will rise
• when prices rise, the amount people will buy will decrease
• when prices rise, the amount people will sell will rise
• when prices rise, the amount people will sell will decrease

The law of supply states

• When prices rise, producers will want to produce more
• When prices rise, producers will want to produce less
• When producers producer more, they expect to make less money
• When producers producer less they expect to make more money

Equilibrium is

• The point at which there is a shortage of a good or service
• The point at which there is surplus of a good or service
• The point at which the amount people are buying at a certain price is equal to that which people are selling
• The point at which people are buying are as high as possible and the sellers are selling for equal prices so there is choice