In what way does the Bill of Rights protect individuals' freedom to engage in business activities?
It recognizes property rights.
Why do public goods demonstrate the limitations of a free market economy?
They allow government to make some economic decisions.
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?
the business cycle
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." - President Franklin D. Roosevelt, 1935
Social Security
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?
market failure
Why does a government place price ceilings, such as rent control, on some "essential" goods?
to limit the impact of equilibrium pricing
How might a firm respond to a higher demand for its goods?
raise prices
What is a main principle of Adam Smith's The Wealth of Nations?
Business prospers by finding out what people want and providing it.
What happens to the equilibrium price when supply goes down?
The price goes up.
How do price changes drive markets toward equilibrium?
They increase or decrease supply or demand.
Suppose the market for the magazine is in equilibrium. Some students insist on raising the cover price by $1 and printing the same quantity. What is likely to happen?
There will be a surplus of 100 magazines.
Advances in technology have reduced the cost of manufacturing MP3 players. If demand does not change,
more MP3 players will be sold at a lower price.
A minimum price, set by the government, that must be paid for a good or service is called a _____.
price floor.
When quantity demanded in a market is more than the quantity supplied, _____ occurs.
a shortage
Why does a perfectly competitive market require many buyers and sellers?
so no individual can control the price
Milk is considered a commodity because it is which of the following?
the same no matter who sells it
A major characteristic of monopolistic competition is that prices will be
higher than in perfect competition.
How does the market price of a good in a monopoly market compare with the market price of the same good in a perfectly competitive market?
The price is higher.
Which is a real-life example of a market that is close to perfect competition?
a farmers' market
A writer should avoid plagiarism because she may
be sued for fraud.
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