1. A major idea of this chapter is that (a) government should not interfere with free enterprise (b) the U. S. economy is basically a free enterprise system (c) the manufacture and sale of felt­tipped pens is profitable (d) consumer goods are always plentiful in a free enterprise system. 2. Another major idea of this chapter is that (a) it pays to sell felt­ tipped pens (b) anyone may start a business in a free enterprise economic system (c) factories produce whatever they please (d) a free enterprise system is run by the government.
3. In a free enterprise system, both buyers and sellers decide (a) what goods and services should be produced (b) how goods and services should be produced (c) who should receive the goods and services that are produced (d) why goods and services are produced
4. What role do profits play in the felt­tipped­pen industry example in the chapter? (a) Profits have no role in the example. (b) Profits result in high prices for pens. (c) Profits discourage people from entering the pen industry. (d) Profits encourage sellers to create wealth by producing the number of pens that buyers want.
5. The U. S. economic system is best described as one with (a) no role for government (b) the government controlling all (c) mostly free enterprise, but some role for government (d) pure competition in all industries.
6. In the U. S. economic system, consumer sovereignty means that (a) the customers decide whether any business succeeds or fails (b) con­ sumers are not free to spend their money as they wish (c) business firms, and not consumers, have the final power (d) companies may choose to manufacture things consumers do not want.
7. Which of the following best describes business competition? (a) your right to enter into a business (b) the right of others to enter the same business as you do (c) your reason for entering the business (d) the equipment used in operating your business.
8. Suppose that there are too many felt­tipped pens on retailers’ shelves. Which of the following is likely to take place? (a) Retailers will buy more pens from their suppliers. (b) Wholesalers will in­ crease orders from manufacturers. (c) Pen sales will increase. (d) Factories will produce fewer pens.