Economics Unit 2

What is a Market Economy?

• An economic system based on government control.

• An economic system where decisions are driven by voluntary exchanges in markets.

• An economic system where supply always exceeds demand.

• An economic system with no private ownership.

What defines Capitalism?

• An economic system based on private ownership and free markets.

• An economic system with complete government control.

• An economic system with no competition.

• An economic system where all resources are shared equally.

What is Free Enterprise?

• A system with no private businesses.

• The freedom for individuals and businesses to operate with minimal government interference.

• A system where the government controls all businesses.

• A system where businesses are owned by the community.

What does Competition refer to in economics?

• The agreement among producers to fix prices.

• The elimination of all other businesses.

• The collaboration between businesses to set prices.

• The struggle among producers for the dollars of consumers.

What is the Profit Motive?

• The aim to increase government control over businesses.

• The goal to reduce prices to the lowest possible level.

• The desire to eliminate all competition.

• The incentive to improve material well-being by making profits.

What does Supply mean in economics?

• The amount of a good or service that producers are willing to sell at different prices.

• The amount of goods that are imported.

• The amount of a good or service that consumers are willing to buy at different prices.

• The total amount of goods available in the market.

What is Demand?

• The total amount of goods available in the market.

• The amount of goods that are exported.

• The amount of a good or service that producers are willing to sell at different prices.

• The amount of a good or service that consumers are willing to buy at different prices.

What is the Equilibrium Price?

• The lowest price a producer is willing to accept.

• The highest price a consumer is willing to pay.

• The average price of a good in the market.

• The price at which the quantity supplied equals the quantity demanded.

What is a Shortage?

• When there is no demand for a product.

• When demand exceeds supply.

• When supply exceeds demand.

• When prices are too high.

What is a Surplus?

• When demand exceeds supply.

• When prices are too low.

• When there is no supply of a product.

• When supply exceeds demand.