Question 1

What are the four types of economic systems?

Accepted Answer

Traditional, Free Market, Command and Mixed Economies

Question 2

What are the basic economic questions that every country must answer?

Accepted Answer

•	What will be produced?
•	How will it be produced?
•	For whom will it be produced?

Question 3

What is the key factor that determines what type of economic system a country has developed?

Accepted Answer

the amount of government involvement in the economy

Question 4

What does a traditional economic system use to make economic decisions?

Accepted Answer

Economic decisions are made based on custom and traditions and historical precedent or how things were decided in the past.

Question 5

What are the characteristic of a free market economy?

Accepted Answer

•	Private ownership of property/resources
•	Profit motive
•	Competition
•	Consumer sovereignty
•	Individual choice
•	Minimal government involvement in the economy

Question 6

What are the characteristics of a command economy?

Accepted Answer

•	Central ownership (usually by government) of property/resources
•	Centrally planned economy
•	Lack of consumer choice

Question 7

What are the characteristics of a mixed economy?

Accepted Answer

•	Individuals and businesses are owners and decision makers for the private sector.
•	The government is owner and decision maker for the public sector.
•	The government’s role is greater than in a free market economy and less than in a command economy.
•	Most economies today, including the United States economy, are mixed economies.

Question 8

What is profit motive?

Accepted Answer

Individuals are encouraged to work hard and start businesses or invest in having better skills or education because if they do these things there is hope of earning money or more money.

Question 9

What is competition in the economy?

Accepted Answer

It is when  two or more businesses try to get the consumers to buy their good or service.

Question 10

How does competition help the consumer?

Accepted Answer

As business compete for the consumer they often do so by offering lower prices and better quality goods and services. This is good for the consumer

Question 11

What is Consumer sovereignty?

Accepted Answer

It means that in a free market economy the people who buy the goods and services have the ultimate power or control over what goods and services are produced.

Question 12

What is individual choice?

Accepted Answer

There are many goods and services for the consumer to choose from when shopping or buying.

Question 13

What is difference between a private sector and a public sector?

Accepted Answer

In a public sector the individuals and businesses own the resources and in a public sector the government owns the resources.

Question 14

Is a mixed economy public or private sector?

Accepted Answer

both public and private sectors are present in a mixed economy

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