Exercise 1
Identify what is being described. Write the letter of the best answer on the line before each number.
A. 1. The economic system in which production decisions are made according to customs and
traditions
a. traditional economic system c. market system
b. command economy d. mixed economy
____B.____2. The system that works under the principle that the interest of society should prevail over
that of the individual
a. tradition economic system c. market system
b. command economy d. mixed economy
C. 3. The system in which market prices serve as signal to the producers about what goods to
produce and how much of these goods should be produced
a. traditional economic system c. market system
b. command economy d. mixed economy
D. 4. Under this system, the economic problems are answered predominantly through the price
mechanism and modified through government intervention.
a. Traditional economic system c. market system
b. Command economy d. mixed economy
C. 5. An economy where individuals exercise free enterprise
a. Traditional economic system c. market system
b. Command economy d. mixed economy
B. 6. It is considered as a basic consuming unit.
a. Firm c. resource
b. Labor d. mixed economy
A. 7. It includes water, forests, minerals, and animals.
a. Land c. resource owners
b. Labor d. none of the above
B. 8. It refers to man’s mental and physical efforts exerted in production.
a. Land c. entrepreneur
b. Labor d. capital
D. 9. It refers to machines, tools, and equipment used in production.
a. Land c. entrepreneur
b. Labor d. capital
