Assessment of Skills and Knowledge(ASK) in Fundamental Business Concepts Practice Test

What is an example of a limit to economic freedom?

1. A person chooses to work fewer hours.

2. A company creates its own product line.

3. A company wants to purchase an office building, but another company purchases it.

4. A consumer is limited to choosing from local stores.

The correct answer is: A company wants to purchase an office building, but another company purchases it.

The correct answer illustrates a limit to economic freedom through the competitive nature of the market. In this scenario, although a company expresses a desire to purchase an office building, that opportunity is removed when another company acquires it first. This highlights a real-world limitation in economic freedom: while entities may intend to engage in various economic activities, their choices can be constrained by the actions and decisions of other economic actors. This competitive dynamic can limit the availability of resources, assets, or opportunities individuals or companies aim to access. In contrast, the other options reflect scenarios that don't necessarily involve a limitation imposed by external forces in the economic environment. Choosing to work fewer hours represents a personal decision regarding labor participation; creating a product line demonstrates entrepreneurial choice and initiative; and while shopping at local stores may seem restrictive, it often reflects consumer preferences or availability rather than a direct limitation on economic freedom.