Super Easy
What is the primary function of prices in a market economy?
To allocate scarce resources efficiently
What happens when governments impose “price gouging” laws during emergencies?
Shortages increase
Why did reforms in China and India boost growth?
Opening free market
Why do losses occur more persistently in socialist or feudal economies?
More mistakes without price signals
What does Friedman highlight as the primary resource that enabled Hong Kong’s economic success?
Its people and a free market
Prices serve as signals that:
To convey information about supply and demand
What does a high price for a standard property indicate:
Scarcity and high demand
Why are markets called “profit-and-loss” systems rather than just “profit” systems?
Losses provide corrective signals
What does Sowell mean when he says “there is no real value”?
Value is subjective to buyers and sellers
What is Friedman's view on the connection between economic freedom and political freedom?
Economic freedom is essential for political freedom
According to Sowell, what ensures Britain is well-fed despite limited farmland?
International trade
According to Sowell, why can’t sellers simply set prices based on greed?
Competition limits pricing power
When prices of oil rise, what typically happens to supply?
Increases
According to Sowell, why will unmet needs always exist?
Resources are finite
According to Friedman, what determines wages in a free market like Hong Kong?
Competition for labor/skills
Prices motivate buyers and sellers because they provide:
Financial incentives
The “real cost” of anything to society is:
The value in its alternative use
Which feature allows markets to coordinate complex economies more efficiently than planners ever will?
Using prices as signals
According to Friedman, why did many immigrants come to America?
To find economic opportunity
What does Friedman identify as the fundamental principle of a free society?
Voluntary cooperation
What do profits and losses together create?
Market flow
What fundamental problem made central planning inefficient?
Separation of knowledge and power
What does competition among producers ensure in a market?
Efficient resource use
What does Milton Friedman suggest was key to the success of early immigrants in America?
A free market with few restrictions
What does Friedman argue is the main reason for Hong Kong’s rising standard of living?
Absence of trade restrictions