Microeconomics Chapter 2 Practice Test

The private ownership of property resources and the use of markets and prices
to direct and coordinate economic activity are characteristic of
a. socialism
b. communism
c. a market economy
d. a command economy

Which is one of the main characteristics of the market system?
a. central economic planning
b. limits on freedom of choice
c. the right to own private property
d. an expanded role for government in the economy

In the market system, freedom of enterprise means that
a. government is free to direct the actions of businesses
b. businesses are free to produce products that consumers want
c. consumers are free to buy goods and services that they want
d. resources are distributed freely to businesses that want them

The maximization of profit tends to be the driving force in the economic decision
making of
a. workers
b. consumers
c. legislators
d. entrepreneurs

How do consumers typically express self-interest?
a. by minimizing their economic losses
b. by maximizing their economic profits
c. by seeking the lowest price for a product
d. by seeking jobs with the highest wages and benefits

Which is a characteristic of competition as economists see it?
a. a few sellers of all products
b. the widespread diffusion of economic power
c. a small number of buyers in product markets
d. the relatively difficult entry into and exit from industries by producers

To decide how to use its scarce resources to satisfy economic wants, a market
economy primarily relies on
a. prices
b. planning
c. monopoly power
d. production targets