Question 1

Large educated populations can contribute to an economy by offering knowledge and entrepreneurship.
Level of Learning 2: Understanding of concepts and principles

Accepted Answer

Large educated populations have the potential to offer expertise in various fields, which can contribute to the growth of new industries, businesses, and innovation. This, in turn, can boost the economy of the country.

Question 2

Adam Smith believed that incentives to seek personal gain would create wealth,but that the government must then step in to make sure that this wealth is equitably distributed.
Level of Learning 3: Application of principles

Accepted Answer

Adam Smith believed in the concept of laissez-faire, which means minimal government intervention in the economy. He argued that self-interest and competition in the marketplace would lead to economic prosperity and the invisible hand of the market would ensure that resources and wealth are distributed efficiently. He did not advocate for government intervention in wealth distribution.

Question 3

Thomas Malthus believed that people in most countries would never be able to achieve high standards of living unless the problems of overpopulation were addressed.
Level of Learning 2: Understanding of concepts and principles

Accepted Answer

Malthus believed that population growth would outpace resources, leading to poverty and low standards of living unless population control measures were taken.

Question 4

A free-market economic system is one in which the market of buyers and sellers decides what is produced,how much is produced,and how it is distributed.
Level of Learning 1: Knowledge of key terms

Accepted Answer

This statement accurately defines a free-market economic system.

Question 5

At the equilibrium price,the quantity consumers desire to buy equals the quantity sellers desire to sell.
Level of Learning 1: Knowledge of key terms

Accepted Answer

This statement accurately describes the concept of market equilibrium, where the quantity demanded by consumers equals the quantity supplied by producers at a certain price.

Question 6

Capitalism is the foundation of the U.S.economic system.
Level of Learning 1: Knowledge of key terms

Accepted Answer

capitalism is indeed the foundation of the US economic system, based on the principles of private ownership, competition, and profit.

Question 7

Adam Smith believed that since businesspeople are motivated to improve their own prosperity,their actions are unlikely to benefit society as a whole.
Level of Learning 2: Understanding of concepts and principles

Accepted Answer

This statement is actually a misconception about Adam Smith's beliefs. In his book "The Wealth of Nations," Smith argued that individuals pursuing their own self-interest could actually lead to the greater good of society through the invisible hand of the market. By seeking to maximize their own profits, businesses would naturally be motivated to provide goods and services that people want and need, which in turn would contribute to the overall well-being of society.

Question 8

As indicated by the Making Ethical Decisions box,activities that lead to corruption can destroy free economic opportunities because they interfere with the right to freely compete.
Level of Learning 3: Application of principles

Accepted Answer

The statement accurately reflects the impact of corruption on economic opportunities and the right to compete. It requires application of the ethical principles related to corruption and free competition.

Question 9

Under capitalism,the government prohibits people and businesses from competing with each other.
Level of Learning 1: Knowledge of key terms

Accepted Answer

Under capitalism, the government generally allows for competition between individuals and businesses, which is a key characteristic of the economic system.

Question 10

Under the basic principle of supply,as the price goes down,manufacturers and suppliers of a product tend to supply less of the product to the market.
Level of Learning 1: Knowledge of key terms

Accepted Answer

This statement correctly reflects the principle of supply, which states that as the price of a product decreases, suppliers tend to reduce the quantity supplied to the market.

Question 11

Adapting to changes in demand is easy for businesses to do.
Level of Learning 1: Knowledge of key terms

Accepted Answer

Adapting to changes in demand can be challenging for businesses to do, depending on their size, resources, and industry. It often requires significant planning, flexibility, and innovation.

Question 12

The concept of the invisible hand begins with the assumption that the primary motivation of entrepreneurs is that they will prosper from their own hard work.
Level of Learning 2: Understanding of concepts and principles

Accepted Answer

The concept of the invisible hand is based on the assumption that individual self-interest, rather than altruism, is the primary motivation of entrepreneurs. It suggests that when each individual pursues their own self-interest, the overall economy benefits. The idea of prospering from one's hard work is related to the meritocracy concept, which is not directly linked to the invisible hand concept.

Question 13

Adam Smith's research focused on determining the best way to distribute a fixed amount of resources,rather than on how to create more wealth.
Level of Learning 2: Understanding of concepts and principles

Accepted Answer

Adam Smith's research was focused on how to create more wealth through the concept of division of labor and free markets, rather than just how to distribute existing resources.

Question 14

The most fundamental of all rights in capitalism is the right to private property.
Level of Learning 1: Knowledge of key terms

Accepted Answer

The right to private property is considered a foundational principle of capitalist economic systems.

Question 15

Due to the fundamental rights afforded to us by a free-market capitalistic system;persons are more willing to take calculated risks.
Level of Learning 1: Knowledge of key terms

Accepted Answer

This statement is true as one of the fundamental principles of a free-market capitalist system is the protection of individual property rights and the ability to reap the benefits of one's own risk-taking and entrepreneurial efforts. This incentivizes individuals to take calculated risks and innovate in order to potentially reap greater rewards.

Question 16

Demand refers to the quantity of a good that consumers are willing and able to buy at different prices at a specific time.
Level of Learning 1: Knowledge of key terms

Accepted Answer

This statement is true as demand is defined as the amount of a product or service that buyers are willing and able to purchase at different prices at a particular time.

Question 17

A basic right under capitalism is the right of businesses to receive government funding.
Level of Learning 1: Knowledge of key terms

Accepted Answer

A basic right under capitalism is not the right of businesses to receive government funding. In a capitalist system, businesses must rely on private funding and market dynamics to survive and thrive.

Question 18

Free-market capitalism has made it more difficult for individuals to gain wealth.
Level of Learning 1: Knowledge of key terms

Accepted Answer

Free-market capitalism, by definition, allows for individuals to compete in a market with little government intervention. This often leads to opportunities for individuals to gain wealth through entrepreneurialism and innovation. However, it does not guarantee wealth for everyone, and some individuals may struggle to succeed in a competitive market.

Question 19

Adam Smith believed that an economic system couldn't truly prosper unless people were taught to value the welfare of others above their own personal gain.
Level of Learning 2: Understanding of concepts and principles

Accepted Answer

Adam Smith believed in the concept of the "invisible hand," where individuals pursuing their own self-interest can lead to positive outcomes for society as a whole, rather than prioritizing the welfare of others above personal gain.

Question 20

In capitalist countries,the government decides what to produce and how the goods and services will be produced.
Level of Learning 1: Knowledge of key terms

Accepted Answer

In capitalist countries, the government's role is limited, and it is the market that determines what is produced and how goods and services are produced through the forces of supply and demand.

Quiz 2: Understanding How Economics Affects Business

Large educated populations can contribute to an economy by offering knowledge and entrepreneurship. Level of Learning 2: Understanding of concepts and principles

Adam Smith believed that incentives to seek personal gain would create wealth,but that the government must then step in to make sure that this wealth is equitably distributed. Level of Learning 3: Application of principles

Thomas Malthus believed that people in most countries would never be able to achieve high standards of living unless the problems of overpopulation were addressed. Level of Learning 2: Understanding of concepts and principles

A free-market economic system is one in which the market of buyers and sellers decides what is produced,how much is produced,and how it is distributed. Level of Learning 1: Knowledge of key terms

At the equilibrium price,the quantity consumers desire to buy equals the quantity sellers desire to sell. Level of Learning 1: Knowledge of key terms

Capitalism is the foundation of the U.S.economic system. Level of Learning 1: Knowledge of key terms

Adam Smith believed that since businesspeople are motivated to improve their own prosperity,their actions are unlikely to benefit society as a whole. Level of Learning 2: Understanding of concepts and principles

As indicated by the Making Ethical Decisions box,activities that lead to corruption can destroy free economic opportunities because they interfere with the right to freely compete. Level of Learning 3: Application of principles

Under capitalism,the government prohibits people and businesses from competing with each other. Level of Learning 1: Knowledge of key terms

Under the basic principle of supply,as the price goes down,manufacturers and suppliers of a product tend to supply less of the product to the market. Level of Learning 1: Knowledge of key terms

Adapting to changes in demand is easy for businesses to do. Level of Learning 1: Knowledge of key terms

The concept of the invisible hand begins with the assumption that the primary motivation of entrepreneurs is that they will prosper from their own hard work. Level of Learning 2: Understanding of concepts and principles

Adam Smith's research focused on determining the best way to distribute a fixed amount of resources,rather than on how to create more wealth. Level of Learning 2: Understanding of concepts and principles

The most fundamental of all rights in capitalism is the right to private property. Level of Learning 1: Knowledge of key terms

Due to the fundamental rights afforded to us by a free-market capitalistic system;persons are more willing to take calculated risks. Level of Learning 1: Knowledge of key terms

Demand refers to the quantity of a good that consumers are willing and able to buy at different prices at a specific time. Level of Learning 1: Knowledge of key terms

A basic right under capitalism is the right of businesses to receive government funding. Level of Learning 1: Knowledge of key terms

Free-market capitalism has made it more difficult for individuals to gain wealth. Level of Learning 1: Knowledge of key terms

Adam Smith believed that an economic system couldn't truly prosper unless people were taught to value the welfare of others above their own personal gain. Level of Learning 2: Understanding of concepts and principles

In capitalist countries,the government decides what to produce and how the goods and services will be produced. Level of Learning 1: Knowledge of key terms