Economic System

What type of economic system does the United States have?

• Market Economy
• Traditional Economy
• Command Economy

 All Americans enjoy the following economic freedoms EXCEPT the freedom to:

• buy and sell various goods
• fix prices
• own property
• earn profit

 In a command economy, most of the capital, tools, and production equipment are

• outdated
• privately owned
• owned by government
• unregulated

The law of supply states that:

• businesses will provide more products when they can sell them at higher prices
• businesses will provide fewer products when they can sell them at higher prices
•  consumers will purchase fewer products when they must buy them at higher prices
• consumers will purchase fewer products when they can buy them at lower prices

The law of demand states that:

•  businesses will provide more products when they can sell them at higher prices
• businesses will provide fewer products when they can sell them at higher prices
•  consumers will purchase fewer products when they must buy them at higher prices
•  consumers will purchase fewer products when they can buy them at lower prices

 The free-enterprise system means that Americans

• are able to run their businesses in the way they think is best
• are entitled to receive free products from stores
• do not have to pay taxes during their first year in business
• depend on the government to tell them how to operate.

Last Christmas a popular toy was sold out all over town. When a local toy store received a shipment, it advertised the toy at twice its normal price. The store doubled the price due to

• scarcity
• competition
• increased productivity
• monopoly

 A small, family-owned bakery is an example of a

• sole proprietorship
• partnership
• corporation
• non-profit organization

 What is a disadvantage unique to a partnership?

• All profits of the business belong to the owners
• Personal property can be lost if the business fails
• More than one person provides capital
• Daily operations can suffer due to disagreements.

Who pays a business’s debts in a failed sole proprietorship?

• the owner of the business
• the employees of the business
• the stockholders
• the government