Question 1
in what way does the bill of rights protect individuals' freedom to engage in business activities?

it recognizes property rights.(correct)

it denies the government the ability to regulate commerce.

it provides free contracts.

it provides each industry with a competitive edge.

question 2
why do public goods demonstrate the limitations of a free market economy?

they allow consumers to make all of the economic decisions.

they allow government to make some economic decisions.(correct)

they allow governments to control most economic decisions.

they prevent consumers from making economic decisions.

question 3
you read an article in a news magazine that explains how the economy expanded for several years, and then went into a period of contraction. what is the main subject of this article?

poverty

microeconomics

the business cycle(correct)

voluntary exchange

question 4
which of the following programs was president roosevelt establishing when he spoke these words?

"we can never insure one hundred percent of the population against one hundred percent of the hazards . . of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age." 1935

temporary assistance for needy families

social security(correct)

war on poverty

the new deal

question 5
big road inc., a private company, is hired to build and run a state's entire road system. the company charges high fees to use its roads. it maintains the roads only in heavily populated areas. which of the following describes this project?

positive externality

public good

market failure(correct)

negative externality

question 6
why does a government place price ceilings, such as rent control, on some "essential" goods?

to prevent the development of a black market

to encourage an increase in supply of necessary items

to limit the impact of equilibrium pricing(correct)

to reduce demand for these goods

question 7
how might a firm respond to a higher demand for its goods?

limit its production

raise prices(correct)

cut prices

increase advertising

question 8
what is a main principle of adam smith's the wealth of nations?

the free market system is inefficient.

business prospers by finding out what people want and providing it.(correct)

people do not always get what they need.

a price-based system provides few incentives for businesses.

question 9
what happens to the equilibrium price when supply goes down?

the price goes up.(correct)

the price goes down.

the price stays the same.

the price goes up, and then goes down.

question 10
how do price changes drive markets toward equilibrium?

they set new price floors and ceilings.

they increase or decrease supply or demand.(correct)

they ensure that prices are fair.

they prevent inflation or deflation.