Econ Ch3

What motivates an entrepreneur to develop and sell a new product?

• Lack of creativity
• Boredom
• Anticipated Profits

• Peer pressure

In free enterprise capitalism, competition ensures that producers work to provide ______.

• the best product at the lowest price

• the highest prices to consumers
• no products or services to consumers
• the lowest quality and value to consumers

How does economic freedom support personal liberty?

• Economic freedom restricts individuals' choices and limits personal liberty.
• Economic freedom allows individuals to make their own choices and pursue their own interests, leading to personal liberty.
• Economic freedom leads to inequality and reduces personal liberty.
• Economic freedom has no impact on personal liberty.

Which example illustrates the ability of a market economy to adapt to change?

• When an increase in the price of oil motivates firms to produce alternative energy.

• When the government heavily regulates businesses and restricts their ability to make changes
• When businesses refuse to adopt new technology and continue with outdated methods
• When businesses ignore changes in consumer preferences and continue producing the same products

In the U.S. form of free enterprise capitalism, the federal government places some regulations on businesses to ______.

• discourage entrepreneurship
• ensure fair competition, protect consumers, and promote public safety
• create monopolies and unfair advantages
• stifle innovation and growth

Why are entrepreneurs important in a free enterprise economy?

• Entrepreneurs only benefit themselves and do not contribute to the economy.
• Entrepreneurs have no impact on innovation, job creation, or economic growth.
• Entrepreneurs drive innovation, create jobs, and contribute to economic growth.
• Entrepreneurs hinder innovation, reduce jobs, and hinder economic growth.

The term consumer sovereignty suggests that the people who rule the marketplace are the _____________.

• buyers

• sellers

• government
• animals

When the government passes a law prohibiting businesses from creating environmental hazards, it is acting in the role of a ______.

• provider

• regulator

• consumer

• protector

What is the government’s primary purpose in its role as a regulator?

• to protect consumers from harm

• to preserve competition in the marketplace

• to provide goods and services for its citizens

• to protect the private property of citizens

The wise use of scarce resources and factors of production refers to the economic and social goal of ______.

• price stability

• full employment

• economic freedom

• economic efficiency