AnswersEconomics and Personal FinanceCompetition and Free Enterprise

Competition and Free Enterprise — Quiz Answers

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1
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Competition happens when two or more businesses

A
complement one another.
B
follow regulations from an agency.
C
fight for the same benefit or gain.
D
work together to achieve success.
2
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What is one downside for consumers to competition in a free-enterprise system?

A
The price of goods often decreases.
B
The quality of goods often suffers.
C
Consumers have limited choices.
D
Consumers must be knowledgeable.
3

In a free-enterprise system, producers decide

A
where to shop for goods.
B
which services to buy.
C
how much to charge.
D
which goods interest them.
4

Which situation is the best example of competition in an economic system?

A
A small CD store slashed its prices to attract customers from a larger store that sells CDs and DVDs.
B
A federal agency has been created to monitor the production and distribution of food supplements.
C
A restaurant just opened down the block from a movie theater, and the restaurant owner hopes to attract diners after each movie.
D
A store that sells sneakers has offered a special deal to customers from a nearby health club.
5

What is regulation in an economic system?

A
Regulation is the removal of limits or restrictions on business activity by the government.
B
Regulation is the placing of limits or restrictions on business activity by producers.
C
Regulation is the removal of limits or restrictions on business activity by producers.
D
Regulation is the placing of limits or restrictions on business activity by the government.
6

In a competitive market, a furniture company decides to use cheaper materials to decrease production costs and pass on the savings. This is an example of

A
reducing the risk for consumers.
B
following a federal regulation.
C
lowering prices for customers.
D
creating a new or better product.
7

Which situation is the best example of regulation in an economic system?

A
A state agency has been created to monitor the production and distribution of sports drinks.
B
A retail business just opened a new store in a community close to its original location.
C
A farmers’ market has offered a special deal to customers from a nearby yoga school.
D
A small clothing shop slashed it prices to attract customers from a larger department store nearby.
8

Innovation allows producers to

A
offer warranties for all of their products.
B
avoid competing with similar businesses.
C
follow restrictions that the government imposes.
D
create goods that draw consumer attention.
9

Which situation is the best example of regulation in an economic system?

A
A state agency has been created to monitor the production and distribution of sports drinks.
B
A farmers’ market has offered a special deal to customers from a nearby yoga school.
C
A small clothing shop slashed it prices to attract customers from a larger department store nearby.
D
A retail business just opened a new store in a community close to its original location.
10

Which is an example of regulation in the automobile industry?

A
the usage of multiple-year warranties to cover repairs
B
the installation of satellite radio systems in some cars
C
the production of hybrid models that conserve gasoline
D
the creation of fuel-efficiency standards for cars

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