Unit Three Test Answer Key Colonial Economics and Today's World

Unit Three Test Answer KeyColonial Economics and Today’s World1) B2) A3) C4) D5) D6) A7) A8) B9) D10) A11) A12) B13) A14) C15) C16) B17) A18) D19) D20) C21) Importing22) Raw Materials23) Goods24) Human Resources25) Mercantilism26) Plantations27) Services28) Cash crops29) Supply, demand30) Grist mills31) Capital32) Consumers33) Investors34) Under the system of mercantilism in colonial times, European countries sentcolonists over to America to find raw materials. These raw materials were sentback to the “mother country” so that producers could manufacture products out ofthem. In selling these products the mother country made lots of profits becausethey cheaply imported the raw materials from colonists, and then sold the finishedproducts abroad and back to the colonists at expensive prices.35) All products sold at the market are influenced by supply and demand. If a productis in high demand but is limited in supply, the price of that product will be high.Conversely, if demand for a product is low, but there is plenty of it, that product’s1

price will be low. Oversupply of any product often exceeds the demand for it,thus causing its price to go down. When products like car gasoline becomelimited, the demand for them cause the prices to skyrocket, much as they haverecently.36) In a free-enterprise economy, all people are welcome to compete with one anotherfor business. There is limited government interference. Competition for businesshelps keep prices low. This is because merchants competing for the same type ofcustomers may loose customers if they mark prices higher than other competitors.Therefore, free enterprise tends to keep prices in check.2