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1
Market economies require private property rights because without these rights:
A)government planning would be impossible.
B)equitable outcomes would be more difficult to achieve.
C)market incentives to produce would be inadequate.
D)self-interest would overwhelm selflessness and too little output would be produced.
2
The underlying concept of fairness embodied by a market economy is best represented by which statement?
A)Them that works, gets; them that don't, starve.
B)From each according to his ability, to each according to his need.
C)Spare the rod, spoil the child.
D)There should be neither rich nor poor.
3
Which of the following is a characteristic of socialism in theory?
A)Private property.
B)Self-interest.
C)Distribution according to need.
D)Free markets.
4
The market where households supply factors of production to businesses and are paid by businesses for doing so is the:
A)goods market.
B)factor market.
C)capital market.
D)money market.
5
Most businesses in the United States are
A)non-profit businesses.
B)corporations.
C)sole proprietorships.
D)partnerships.
6
One advantage of a corporation over a partnership is:
A)corporate profits are subject to a lower tax rate.
B)limited liability.
C)it is easier for owners of a corporation to make business decisions.
D)corporate owners have greater direct control over operations.
7
Federal government's largest expenditures is on
A)defense.
B)income security.
C)interest.
D)health and education.
8
The government serves as a referee in the economy when it:
A)increases expenditures on education.
B)decreases income taxes.
C)increases Social Security transfers.
D)alters health and safety standards for certain industries.
9
In general, international trade is:
A)more difficult to conduct than domestic trade.
B)as difficult to conduct as domestic trade.
C)less difficult to conduct than domestic trade.
D)no different from domestic trade.
10
An externality is defined as:
A)the effect of a decision on a third party that is ignored by the decision maker.
B)a good that, when consumed by one individual, can still be consumed by others.
C)a good that, when consumed by one individual, cannot be consumed by another.
D)a situation in which the government intervenes and makes things worse.





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