Comparing Economic Systems — Quiz

Question 6 • Economics (Full-Year)

Which of these businesses most likely exists in a free-market economy?

Answer

A government-owned company produces medical equipment. The government decides how the equipment will be distributed and how much consumers will pay.

The owner of a small bakery has seven employees. She must increase her employees’ hourly rate after the government increases the minimum wage.

A business owner opens a factory to produce airplane parts. The business owner decides which parts and how many to produce based on customer orders.

Community members hunt animals and harvest crops. They use little money and trade with each other to obtain anything else they might need.

Explanation

In a free-market economy, private businesses make production decisions based largely on consumer demand. The factory owner in C chooses which airplane parts to make and how many based on customer orders, which is a market-based decision. A is controlled by the government, while D describes a traditional economy. B includes government regulation, though that alone does not rule out a free-market economy.

AI-written and checked against the verified answer.

More from this Course

Quiz

Quiz

Test