Free to Choose: A Personal Statement | Short Question Answer Key

Short Answer Key

Chapter 1, The Power of the Market

1. The economy functions on the basis of:

voluntary cooperation

2. According to Friedman, the former Soviet economy was based on:

command

3. The command elements of every economy include things like:

prices

4. Adam Smith says that voluntary exchange will not take place unless:

both parties benefit from it

5. The price system functions in such a way that each individual acting in his own best interests, makes everyone better off. This concept is known as the:

invisible hand

6. Adam Smith wrote:

The Wealth of Nations

7. Which of the following is not a function of the price system:

government established prices

8. The higher price of pencils results in all but the following:

fewer pencils

9. What is a good source of information on prices and markets?

The Wall Street Journal

10. Prices function to transmit information...
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