Unit 1A Test

Question 82 • AL-United States Government

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

Answer

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

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

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

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.

Explanation

In a free-market economy, private businesses make production decisions in response to what customers want. In choice D, the owner decides what airplane parts and how many to produce based on customer orders. Choice C describes government control, while B shows the government regulating wages.

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