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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

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