Chapter 7 Regional Development Study Guide

What does it mean to have a free enterprise economy?

• Markets are controlled by the government.

• Sellers choose who they sell to and what they make.

• The government decides all prices.

• People have no power.

Answer explanation

A free enterprise economy allows sellers to make their own choices about what to produce and who to sell to, promoting competition and innovation. This contrasts with government-controlled markets where prices and production are dictated.

In a free enterprise economy, who can own private property?

• Only the government

• Individuals and business owners

• Only large corporations

• No one

Answer explanation

In a free enterprise economy, individuals and business owners have the right to own private property, which is a fundamental principle of this economic system. This allows for personal and commercial investment and growth.

What happens in a free market when the demand is greater than the supply?

• Prices go down.

• Prices stay the same.

• Prices go up.

• The market closes.

Answer explanation

In a free market, when demand exceeds supply, competition for the limited goods drives prices up. Sellers can charge more as buyers are willing to pay higher prices to secure the available products.

What happens in a free market when the supply is greater than demand?

• Prices go up.

• Prices go down.

• Prices stay the same.

• The market closes.

Answer explanation

In a free market, when supply exceeds demand, there is excess product available. To encourage sales and clear inventory, sellers typically lower prices, leading to the correct answer: Prices go down.

What happens when there are many sellers in a market?

• Consumers have fewer choices

• Consumers have many choices

• Prices are fixed

• Only one product is available

Answer explanation

When there are many sellers in a market, competition increases, leading to a variety of products and options for consumers. This results in consumers having many choices, which is the correct answer.

What is the difference between imports and exports?

• A) Imports are goods we sell to other countries; exports are goods we buy from other countries.

• B) Imports are goods and services we buy from other countries; exports are goods and services that producers sell in another country.

• C) Imports are services we provide to other countries; exports are services we receive from other countries.

• D) Imports and exports are the same thing.

Answer explanation

Choice B correctly defines imports as goods and services bought from other countries, while exports are those sold to other countries. The other options misrepresent these terms.

Identify whether the description fits economic choice or opportunity cost: "This is what consumers have to make when goods and services become scarce, because they cannot get everything they want."

• A) Economic Choice

• B) Opportunity Cost

• C) Financial Decision

• D) Market Demand

Answer explanation

The description fits 'Economic Choice' as it refers to the decisions consumers must make when faced with scarcity, indicating they cannot have everything they desire.

Identify whether the description fits economic choice or opportunity cost: "This is what consumers lose when they choose between the goods and services they will get and the ones they will not get."

• A) Economic Choice

• B) Opportunity Cost

• C) Financial Decision

• D) Market Demand

Answer explanation

The description refers to what consumers forgo when making a choice, which is the definition of opportunity cost. Therefore, the correct answer is B) Opportunity Cost.

What made steam power different from water power from rivers, human power, or horsepower?

• A) Steam power could only be used near water.

• B) Steam power could be used anywhere.

• C) Steam power was slower than water power.

• D) Steam power was less reliable than human power.

Answer explanation

Steam power was different because it could be used anywhere, unlike water power which required a river or water source. This flexibility allowed for greater industrial development and transportation options.

What kind of renewable resource did steam power use?

• A) Solar power

• B) Wind power

• C) Waterpower, water from a river or waterfall

• D) Geothermal power

Answer explanation

Steam power primarily utilized waterpower, harnessing energy from rivers or waterfalls to generate steam. This makes option C the correct choice, as it directly relates to the renewable resource used in steam engines.