Question 1

Villagers in Xiaogang, China, produced more rice than those in surrounding villages because:

Accepted Answer

The villagers in Xiaogang were able to keep the output they produced individually, which provided them with a stronger incentive to work hard and produce more. This led to a significant increase in their rice production compared to surrounding villages, even though they had similar farmland and seeds.

Question 2

GDP per capita is one way to measure an economy's growth. China and India began to progress when they allowed private ownership, around ____. Since then, there has been steady, strong growth in these economies.

Accepted Answer

D

Question 3

Overfishing and extinction of species arise because of:

Accepted Answer

Overfishing and extinction of species occur due to the lack of incentive to take care of these species. This lack of incentive may come from a variety of factors such as insufficient regulations, weak enforcement of rules, and short-term economic interests. These factors discourage responsible behavior towards natural resources and encourage depletion of resources.

Question 4

Which of the following is not a limitation a person faces when shopping for clothes?

Accepted Answer

The freedom to make rational choices is not a limitation a person faces when shopping for clothes. The other options (time, budget, available styles, and selection of stores) may limit a person's choices when shopping for clothes.

Question 5

It can be said that ____ laid the foundation for the Industrial Revolution.

Accepted Answer

Private property rights allowed individuals and businesses to own and invest in resources and technological advances, incentivizing innovation and investment in the manufacturing industry. This laid the foundation for the Industrial Revolution. The other options listed may have contributed to economic growth and development, but they did not directly lead to the Industrial Revolution.

Question 6

In 1981, in San Francisco Solano, Argentina, about 1,800 families took over a piece of wasteland. The government was able to deed 60 percent of this land to some families while the remaining part could not be deeded. The resulting houses varied greatly, based on whether the residents received title. Those who received title also behaved differently, having fewer children, and the children experienced more education and better health. This is an example of the results from:

Accepted Answer

This scenario highlights the importance of private property rights, as those who received title to the land were able to reap the benefits of home ownership, resulting in improved education and health outcomes for their families. The inability to deed the remaining land hindered economic progress and further improvement in quality of life for those families.

Question 7

Which of the following is true regarding scarcity?

Accepted Answer

Scarcity is a basic economic problem that arises from unlimited human wants and needs competing against limited resources to satisfy those wants and needs. It is impossible to eliminate scarcity completely as resources will always remain limited while human wants and needs are unlimited.

Question 8

The major economic problem is to:

Accepted Answer

The major economic problem is how to allocate limited resources among unlimited wants and needs. This is because resources such as labor, capital, and land are scarce, whereas people's wants and needs are unlimited. Therefore, economic systems must make choices on how to use scarce resources efficiently to satisfy the greatest number of people's wants and needs.

Question 9

Economic freedom:

Accepted Answer

Economic freedom is the ability to engage in voluntary trade. It means being able to make transactions and contracts without interference from government or other authority. It includes the right to own property as well as other economic liberties, such as the ability to start a business, invest in the market, and choose one's occupation. It is not about avoiding taxes or only affecting poor people, but rather the ability of individuals to make choices and pursue their economic goals without excessive government intervention.

Question 10

​A piece of land is divided between John and Mary. However, only John gets the title to his share of land. Which of the following is true?

Accepted Answer

Since John has the title to his share of the land, he can use it as collateral for a loan from a bank. Titles provide legal ownership, allowing the owner to use the property as security for financial transactions.

Question 11

​In spite of having no natural resources, a country like _____ was able to make itself one of the wealthiest countries in the world because it allowed private ownership.

Accepted Answer

Hong Kong is a classic example of a region with few natural resources but with an abundance of entrepreneurial spirit and a commitment to free-market policies. Hong Kong today is one of the most prosperous countries in the world, with GDP per capita on par with that of the United States, despite having virtually no natural resources. Its success is largely attributed to the government's commitment to a low-tax, free-market economic system that values private ownership and entrepreneurship. India, Poland, Hungary, and China all have some natural resources, so they are not suitable choices for this question.

Question 12

One of the reasons communism failed was because:

Accepted Answer

In communist societies, everyone is supposed to receive equal pay, regardless of how hard they work. This creates a lack of incentive for individuals to work hard and be productive. Without the motivation to work hard and be productive, the economy can fail. This was a major factor in the failure of communism.

Question 13

Sonia works at a restaurant where tips are pooled and divided equally. Anna works at a different restaurant where she keeps the tips her customers leave for her. Which of the following is true?

Accepted Answer

Anna works harder because she has a direct incentive to provide better service to her customers to receive better tips which are her private property. Sonia, on the other hand, receives the same amount of pooled tips regardless of her level of service, so she may not have the same level of incentive to work harder.

Question 14

Which of the following hinders economic freedom?

Accepted Answer

Regulations on emissions from automobiles can increase the cost of production and limit the choices available to consumers, thus hindering economic freedom. Lower taxes, secure private property rights, and a democratic government typically promote economic freedom. International trade can have both positive and negative effects on economic freedom depending on the specific circumstances.

Question 15

According to the text, as compared to rich countries, most of the poor countries do not fare well because:

Accepted Answer

The text states that most of the poor countries have limited property rights, which can be a major obstacle for economic growth and development. The other options mentioned in the answer choices, such as lack of oil, limited access to education, high tariffs, and lack of natural resources, can also be barriers to development in some cases, but they are not mentioned as the primary reason for the underperformance of poor countries, as is the case with limited property rights.

Question 16

_____ is the primary reason that explains why some nations are richer than the others.

Accepted Answer

Private ownership allows for individuals to take risks and invest in their own businesses or ideas, leading to economic growth and ultimately, a higher standard of living. Without private ownership, there would be limited incentives for individuals to invest in their own ideas or take risks, leading to slower economic growth and development.

Question 17

Scarcity:

Accepted Answer

Scarcity requires people to make choices to satisfy their wants. Scarcity exists because there are limited resources to satisfy unlimited wants and needs. Therefore, people have to make choices about how to allocate their resources to obtain the things that they want the most.

Question 18

Which of the following would economic freedom lead to?

Accepted Answer

Economic freedom allows individuals to pursue their own self-interest and entrepreneurial endeavors, leading to innovation and economic growth. This in turn often leads to higher standards of living, better living conditions, longer life expectancy, and improved education opportunities. Therefore, all of the options are correct.

Question 19

The economist Hernando de Soto extensively studied:

Accepted Answer

Hernando de Soto is most known for his work on the importance of secure property rights in economic development, particularly in developing countries. He argues that without a legal system that protects property rights, people are unable to invest in their own capital, creating a barrier to economic growth.

Question 20

Private property rights are important because:

Accepted Answer

Private property rights create incentives for individuals to invest, innovate, and improve their standard of living by ensuring that they can reap the benefits of their efforts and investments.

Quiz 1: The Wealth of Nations: Ownership and Economic Freedom