1. A free-market economy allocates its resources primarily through:

a. Central planning

b. The price system

c. Negotiation

d. Bargaining

e. None of the above

2. Consumer advocates often argue that consumer needs are not being met. In a free enterprise system, consumer sovereignty implies that:

a. Consumers get those goods and services that their representatives in Congress determine to be appropriate

b. Consumers get all the goods and services that they desire

c. Businesses provide those goods and services that they deem most important

d. Consumers receive those goods and services for which they are willing and able to pay

e. Each consumer receives an equal share of all goods and services produced

3. Which of the following is a public good?

a. Doctor’s medical services

b. National defense

c. Automobiles

d. Steel

e. Corn

4. The rationing function of the price system:

a. Produces an equal per capita division of all goods and services among consumers.

b. Is equivalent to “first come, first served” system of distribution

c. Distributes goods on the basis of consumer desires

d. Allocates goods to those who are willing and able to pay the price

e. Functions best when price controls are imposed by the Government

5. To determine produce prices, a communist country relies on:

a. Marginal-cost pricing

b. Cost-plus pricing

c. Supply and demand

d. Incentive pricing

e. Target pricing

Answer rating: 100% (QA)

1 b The price system 2 b Consumers get ... View the full answer