Economic Systems
Which economic system is based on customs and traditions?
A. Market
B. Command
C. Traditional
D. Mixed
C. Traditional
What is an incentive?
A. A rule that forces people to act
B. Something that encourages people to make a choice
C. A type of economic system
D. A good or service
B. Something that encourages people to make a choice
What does opportunity cost mean?
A. Everything you lose when you make a choice
B. The money you spend on something
C. The reward you receive
D. The next best thing you give up
D. The next best thing you give up
Who usually makes economic decisions in a market economy?
A. Individuals and households
B. The government
C. Traditions
D. Kings or rulers
A. Individuals and households
This document, signed in 1776, explained why the American colonies wanted independence from Great Britain.
The Declaration of Independence
In which economic system does the government make all production and distribution decisions?
Command Economy
A store offers a "Buy One, Get One Free" deal. This is an example of what?
A positive incentive
You choose to spend your allowance on a movie ticket instead of saving it. What is the opportunity cost?
Saving the money (or whatever you could have bought instead)
Why do incentives usually change people's behavior?
Because they change the costs or benefits of a decision
This amendment guarantees freedom of speech, religion, and the press.
First Amendment
Why is the United States considered a mixed economy?
People make choices but there are few government restrictions
A city lowers water bills for households that use less water. How does this incentive affect household decisions?
Households might choose to use less water to save money
A students chooses to play a video game instead of studying. What is the opportunity cost?
Studying
Why are incentives not the same as rules?
Incentives encourage or discourage choices, but rules require certain behavior
This U.S. war was fought from 1861 to 1865
Civil War
How is a mixed economy different from a market economy
A mixed economy includes some government rules as well as individual choices
Explain one reason why a household might ignore an incentive.
The cost may be too high, the reward too small, or it may be inconvenient
Why is opportunity cost important when making decisions?
It helps people understand what they are giving up when making a choice
How do prices act as signals in a market economy?
They encourage or discourage buyers' behavior
This system divides power between the national government and state governments.
Federalism
A government requires household to limit electricity use and charges fines if they do not. Which economic system does this best represent and why?
Command, because the government is requiring certain behavior
Explain how the same incentive might affect two households differently.
Different income levels, needs, or preferences lead to different choices
Explain the opportunity cost for a household that chooses lower bills by using less electricity during peak hours.
Giving up convenience or comfort during those times
Why is choice an important idea in economics?
Because scarcity forces people to decide how to use limited resources
This movement in Europe encouraged new ideas about art, science, and learning and helped lead to modern times.
Hint: a fair
Renaissance