4
QuizMultiple Choice

Competition and Free Enterprise — Quiz

Question 4 • Economics

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

Answer
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.

Explanation

Competition occurs when businesses try to attract the same customers by offering similar products or services. The small CD store cuts prices to win CD customers from a larger store, so the two stores are competing. The restaurant and movie theater offer complementary activities, while the other choices describe government monitoring or a promotional deal.

AI-written and checked against the verified answer.

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