Economic Systems Review

What are the three basic economic questions that all economic systems must answer?

• What to produce, how to produce, and for whom to produce

• What is the cost of production, how to distribute goods, and who will consume them

• How to maximize profit, how to minimize cost, and how to allocate resources

• What are the resources available, how to utilize them, and what are the opportunity costs

Which type of economic system is based on customs and traditions?

In a traditional economy, people typically meet their needs by:

• Trading goods and services

• Using advanced technology

• Relying on government support

• Investing in stock markets

A command economy is structured in which of the following ways?

• The government makes all economic decisions.

• Supply and demand determine production.

• Businesses operate independently of government control.

• The economy is driven by consumer choices.

Which of the following best describes the characteristics of a market economy?

• Government controls all economic activities.

• Decisions are made based on supply and demand.

• Resources are allocated by central planning.

• Prices are fixed by the government.

A mixed economy is a type of economic system that combines elements of which two economic systems?

• Capitalism and Socialism

• Feudalism and Communism

• Traditional and Command

• Market and Feudal

Which economic system is characterized by private ownership and the goal of profit maximization?

• Command economy

• Market economy

• Traditional economy

• Mixed economy

In which type of economy does the government play a significant role in regulating and controlling economic activities?

• Market economy

• Command economy

• Traditional economy

• Mixed economy

What is a key feature of a traditional economy?

• High reliance on technology

• Centralized decision-making

• Customs and traditions guide economic decisions

• Free market competition

What is a primary disadvantage of a command economy?

• High levels of competition

• Lack of consumer choice

• Rapid technological innovation

• Efficient resource allocation