Free Enterprise System Quiz

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Questions and Answers

Which of the following is NOT a core characteristic of a free enterprise system?

  • Individuals are free to decide what to produce.
  • Individuals are free to decide at what price to sell goods and services.
  • Individuals are free to decide how to produce goods and services.
  • Government sets strict price controls on goods and services. (correct)

What is the primary motivation for businesses in a free enterprise system?

  • To serve the public good.
  • To maximize profit. (correct)
  • To minimize environmental impact.
  • To provide employment opportunities.

Which of the following best describes the concept of the 'invisible hand' as defined by Adam Smith?

  • Government regulation that guides economic activity.
  • The collective wisdom of consumers driving market decisions.
  • The natural tendency for individual self-interest to benefit society. (correct)
  • The invisible force that controls prices in a free market.

What economic system is characterized by government ownership and control of major industries?

<p>Socialism (A)</p> Signup and view all the answers

Which of the following is NOT a characteristic of a mixed economy?

<p>Complete freedom of business activity. (A)</p> Signup and view all the answers

What is the difference between a code of ethics and a code of conduct?

<p>A code of ethics is a set of general principles, while a code of conduct outlines specific rules and behaviors. (C)</p> Signup and view all the answers

What is the primary purpose of the Sarbanes-Oxley Act of 2002?

<p>To protect whistleblowers from retaliation. (D)</p> Signup and view all the answers

Which of the following best describes the Latin phrase 'caveat emptor'?

<p>The buyer is responsible for inspecting and verifying the quality of products. (B)</p> Signup and view all the answers

Flashcards

Free enterprise

A system where individuals decide what to produce, how to produce, and at what price to sell.

Business

Organized effort of individuals to produce and sell goods and services for profit.

Profit

What remains after all business expenses have been deducted from sales revenue.

Economics

The study of how wealth is created and distributed within a society.

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Capitalism

An economic system where individuals own and operate businesses providing goods and services.

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Invisible hand

A term used by Adam Smith describing how personal gain benefits others and the economy.

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Whistle-blowing

Informing the press or officials about unethical practices within one's organization.

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Caveat emptor

A Latin phrase meaning 'let the buyer beware'.

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Related Documents

MCQ_Flashcards.csv

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