Question

b) profit motive
c) private property rights
d)socialism

1. which principle explains why businesses seek to lower costs and raise income?

a) profit motive
b) private property
c) free trade
d) mercantilism

1. competition in capitalism leads to:

a) higher prices and less variety
b) lower prices and innovation
c) government control of business
d) elimination of profits
part c: capitalism in practice

1. in capitalism, prices are generally determined by:

a) the king
b) the government
c) supply and demand
d) unions

1. which of these best describes laissez - faire economics?

a) government should regulate all trade
b) government should have limited interference in markets
c) the king should direct business activity
d) workers should own factories

1. which modern industry first demonstrated capitalism’s growth during the industrial revolution?

a) shipbuilding
b) textile industry
c) farming
d) mining

1. what role does self - interest play in capitalism, according to smith?

a) it harms society
b) it guides individuals to unintentionally benefit society
c) it only benefits the rich
d) it requires government enforcement

1. which of the following is a positive effect of capitalism?

a) innovation and efficiency
b) guaranteed equality for all
c) no competition
d) government planning

Explanation:

• Question 9: The profit motive drives businesses to increase profits by lowering costs and raising income.
• Question 10: In capitalism, competition leads to firms trying to offer better - priced products and innovate to gain an edge.
• Question 11: In a capitalist system, prices are determined by the interaction of supply and demand.
• Question 12: Laissez - faire economics advocates for limited government interference in markets.
• Question 13: The textile industry was the first to show significant capitalist growth during the Industrial Revolution.
• Question 14: According to Adam Smith, self - interest in capitalism guides individuals to unintentionally benefit society.
• Question 15: Capitalism encourages innovation and efficiency as firms compete for profits.

Answer:

1. a) Profit motive
2. b) Lower prices and innovation
3. c) Supply and demand
4. b) Government should have limited interference in markets
5. b) Textile industry
6. b) It guides individuals to unintentionally benefit society
7. a) Innovation and efficiency