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This quiz consists of 5 multiple choice and 5 short answer questions through Chapter 2, The Tyranny of Controls.

Multiple Choice Questions

1. According to Friedman, the former Soviet economy was based on:
(a) free markets
(b) none of the above
(c) command
(d) voluntary cooperation

2. The command elements of every economy include things like:
(a) forbidding the purchase and sales of heroin
(b) court orders
(c) military conscription
(d) prices

3. What kind of international trade is best?
(a) partically free trade
(b) no trade
(c) free trade
(d) trade with restrictions

4. The higher price of pencils results in all but the following:
(a) fewer pencils
(b) better worker condiciton for pencil prolduction workers
(c) higher wages for pencil production workers
(d) the firing of more workers to produce pencils

5. International trade theory is based on:
(a) the principle of comparative advantage
(b) geography
(c) inflows and outflows
(d) the principle of absolute advantage

Short Answer Questions

1. Trade restrictions create:

2. 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:

3. A change in prices affects all but the following:

4. Free trade takes place when:

5. The distribution of income is determined by all but the following:

(see the answer key)

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