AnswersAISD Economics 2026-27Resources and Scarcity

Competition and Free Enterprise Answers

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A frozen foods company changes an ingredient to meet a new government standard. This is an example of

A
following a federal regulation.
B
lowering prices for customers.
C
reducing the risk for consumers.
D
creating a new product.
2
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What is regulation in an economic system?

A
Regulation is the placing 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 the government.
D
Regulation is the removal of limits or restrictions on business activity by producers.
3

Why does the US government create regulatory agencies? Check all that apply.to create fair competition between producersto limit the knowledge of certain consumersto allow producers to have greater freedomto protect consumers’ health and safetyto prevent the formation of monopolies

A
to create fair competition between producers
B
to limit the knowledge of certain consumers
C
to allow producers to have greater freedom
D
to protect consumers’ health and safety
E
to prevent the formation of monopolies
4

What is one downside for consumers to competition in a free-enterprise system?

A
Consumers must be knowledgeable.
B
Consumers have limited choices.
C
The quality of goods often suffers.
D
The price of goods often decreases.
5

Innovation allows producers to

A
create goods that draw consumer attention.
B
follow restrictions that the government imposes.
C
avoid competing with similar businesses.
D
offer warranties for all of their products.
6

What kind of economy uses a free-enterprise system?

A
a closed economy
B
a command economy
C
a market economy
D
a traditional economy
7

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

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

advancesupportlimitterminate

A
advance
B
support
C
limit
D
terminate
9

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

A
A restaurant just opened down the block from a movie theater, and the restaurant owner hopes to attract diners after each movie.
B
A small CD store slashed its prices to attract customers from a larger store that sells CDs and DVDs.
C
A store that sells sneakers has offered a special deal to customers from a nearby health club.
D
A federal agency has been created to monitor the production and distribution of food supplements.
10

In a free-enterprise system, producers decide

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

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