What would be a potential risk if Sarah sets up a sole proprietorship?

Sarah would be liable for all costs and damages.

For an industry to be perfectly competitive, what must exist?

many firms selling identical items

The Law of Supply states that

the qty. supplied of a product will increase when the price of it decreases

What are some of the usual barriers to entry?

licenses, patents, high start up costs

Which of these would have a negative impact on the supply of mechanical pencils?

The increase in the cost of resources.

Which determinant MIGHT increase supply in the market?

an increase in the number of sellers of a product

Which is LEAST likely an advantage to a corporation?

establishment of price ceilings

What would be a disadvantage of getting a partner?

Have to share all of the profits with the partner.

Which markets compete in non-price competition?

monopolistic competition and oligopoly

What would be the situation if the price was moved from p2 to p1?

there would be a surplus of widgets

The new oven in Mr. Brown's bakery allows him to produce bread more efficiently & cheaply. What is MOST LIKELY effect?

the price drops and the quantity demanded increases

Labor and other factors of production are sold on resource markets. How are businesses involved in this flow?

Businesses sell goods and services on product markets.

To have demand, what must you have

the desire and the ability to pay for the item.

If the supply engineers increases at the same time that demand for these workers decreases, what would be effect

Wages would decline as the competition for jobs increases.

Which scenario best represents monopolistic competition?

Stay at specific hotel because it has a pool with a slide.

How can firms engage in non-price competition?

Coupons and convenient locations

Which factor might cause an increase in the supply of a product?

the introduction of new technology

The demand curve has moved to the right on the graph. This shows that

the demand for Twinkie-Doodles has increased.

Why is there no competition in a monopoly?

There are no close substitutes.

Which of these statements is TRUE of complementary products?

An increase in demand for one will result in increased demand for other.

Using this diagram, what outcome can be predicted if individuals stopped purchasing goods?

Businesses would experience all of these economic outcomes.

What is meant by the statement "money is a medium of exchange"?

Money can be traded for goods and services.

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Economics - Unit 2 Test Review

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Circular Flow, Demand, Supply, Business Organizations and Market Structures

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Questions 43

Answers

1
Money that individuals receive from businesses return to businesses in
the product markets.
the purchase of land.
the payment for resources.
the factor markets.
2
What would be a potential risk if Sarah sets up a sole proprietorship?
Sarah would lose her popularity.
Sarah would risk losing partners.
Sarah would be liable for all costs and damages.
Sarah would risk nothing.
3
All of these would cause a shift to the left of the demand curve EXCEPT for
reduction in exports.
declining consumer spending.
increased money supply.
an increase in taxes.
4
For an industry to be perfectly competitive, what must exist?
many firms selling different items
there are no competitive markets
many firms selling identical items
many consumers wanting different items
5
The Law of Supply states that
the supply of a product is not affected by its price.
when the supply of a product decreases, the price of the product falls.
when the supply of a product increases, the price of the product rises.
the qty. supplied of a product will increase when the price of it decreases
6
Joe and Bob have a product they would like to sell. They decide to share the risks and profits.
corporation
entrepreneurship
partnership
sole proprietorship
7
What are some of the usual barriers to entry?
lacking government regulation, plentiful supply of labor
licenses, patents, high start up costs
weak demand for product, low market price
high unemployment, poorly skilled labor, resource shortages
8
Which of these would have a negative impact on the supply of mechanical pencils?
An increase in employee productivity.
The increase in the cost of resources.
The company purchased faster technology.
Receiving a government subsidy to cover cost of production
9
Which determinant MIGHT increase supply in the market?
an increase in the number of sellers of a product
an increase in the price of complementary goods
an increase in the number of consumers in the market
an increase in the price of inputs to make the product
10
Two tire companies control 75% of the tire market in the country. What type market structure?
monopoly
perfect competition
monopolistic competition
oligopoly
11
Johnny earns $21.30 from shares he has invested in. What type of earning is this called?
dividend income
capital gains
interest income
taxes
12
Two cobblers in town control the shoe making business. Which market structure?
corporation
partnership
oligopoly
perfect (pure) competition
13
When a firm offers "Free Shipping", what type of competition does this BEST reflect?
monopolistic competition
pure competition
price competition
non-price competition
14
Which is LEAST likely an advantage to a corporation?
limited liability of stock holders
ability to sell stock
establishment of price ceilings
ability to raise capital
15
Mr. Simpson is liable for all debts of his company. Which type of business organization?
conglomerate
sole proprietorship
monopoly
corporation
16
What would be a disadvantage of getting a partner?
Responsible for paying all shareholders.
Has to go through a government application process.
Have to share all of the profits with the partner.
Responsible for all of the debts the business incurs.
17
From this graph, you can tell that a move from D1 to D3 would show
a decrease in supply.
an increase in demand.
a decrease in demand.
an increase in supply.
18
Which markets compete in non-price competition?
monopoly and monopolistic competition
perfect competition and monopolistic competition
monopolistic competition and oligopoly
oligopoly and perfect competition
19
What would be the situation if the price was moved from p2 to p1?
the price would be dropped
the price would be too low
there would be a surplus of widgets
there would be a shortage of widgets
20
The new oven in Mr. Brown's bakery allows him to produce bread more efficiently & cheaply. What is MOST LIKELY effect?
the price rises and the quantity demanded decreases
the price drops and the quantity demanded increases
the price drops and the quantity demanded decreases
the price rises and the quantity demanded increases
21
Jim and Rhonda have money to invest. They are worried about liability. Which business form?
corporation
proprietorship
monopoly
partnership
22
Labor and other factors of production are sold on resource markets. How are businesses involved in this flow?
On product markets, businesses sell factors of production.
Businesses sell goods and services on product markets.
Businesses purchase goods and services on product markets.
On resource markets, individuals buy factors of production.
23
To have demand, what must you have
a basic need and a constant supply of the item.
the desire and the ability to pay for the item.
a desire for the item.
the ability to pay for the item.
24
If the supply engineers increases at the same time that demand for these workers decreases, what would be effect
Wages would stay the same as job opportunities increase.
Wages would increase as competition for these workers increases.
Wages would increase as the number of workers increases.
Wages would decline as the competition for jobs increases.
25
Which scenario best represents monopolistic competition?
Two restaurants open to compete with a national food chain.
Stay at specific hotel because it has a pool with a slide.
Two firms compete against to sell pearls in an urban market.
A company is the sole provider of internet service in a city
26
How can firms engage in non-price competition?
Price wars and new products
Highest quality and lowest price
Coupons and convenient locations
Price match guarantees and brand recognition
27
Which would represent price competition strategy?
"Forget the Rest, Stick with the Best!"
"Get the Most for Your Money!"
"From Our Family to Yours!"
"The Highest Quality on Earth!"
28
What economic concept does this graph BEST illustrate?
law of supply
scarcity
productivity
law of demand
29
Type of business organization - least input & decision-making on daily operations by owners?
monopoly
corporation
partnership
oligopoly
30
Which factor might cause an increase in the supply of a product?
fewer sellers in the marketplace
a decrease in productivity
the introduction of new technology
an increase in the cost of raw materials
31
Corporate stockholders are not responsible for the debts of corporation. This is MOST likely
partnerships
dividends
unlimited liability
limited liability
32
The soft drink industry is an example of what type of market structure?
open competition
pure competition
oligopoly
monopoly
33
The demand curve has moved to the right on the graph. This shows that
buyers and sellers cannot agree on a price.
the price for Twinkie-Doodles went down.
the supply of Twinkie-Doodles has decreased.
the demand for Twinkie-Doodles has increased.
34
Assuming that the graph follows the normal laws of economics, the line represents
production possibilities
equilibrium price
demand
supply
35
Coke and Pepsi. Which market structure would this represent?
monopolistic competition
monopoly
oligopoly
pure competition
36
Why is there no competition in a monopoly?
Prices are set by the government.
There are no close substitutes.
There are too many substitutes.
The government forbids competition.
37
Which of these pairs is an example of complementary products?
sneakers and sandals
butter and margarine
DVDs and VHS tapes
hot dogs and hot dog buns
38
Which of these statements is TRUE of complementary products?
An increase in demand for one will result in increased demand for other.
An increase in price of one will cause a decrease in the price of other.
An increase in demand for one will cause a decreased demand for the other.
An increased supply of one good will result in decreased supply of other
39
Business organization has advantage of specialization, but disadvantage of unlimited liability.
oligopoly
partnership
sole proprietorship
corporation
40
An American company sells solar cells. What would introduction Chinese company that produces solar cells do to market?
force the American company out
lower prices
raise prices
eliminate demand
41
Using this diagram, what outcome can be predicted if individuals stopped purchasing goods?
Businesses would produce less goods.
Businesses would lose income.
Businesses would not be able to pay for resources.
Businesses would experience all of these economic outcomes.
42
If the supply curve shifts from S1 to S2 in the graph, and nothing else changes, what do you expect to happen?
The demand will fall.
The price will remain the same.
The price will fall.
The price will rise.
43
What is meant by the statement "money is a medium of exchange"?
Money can be acculumated as a form of wealth.
Money is a measure of a product's value.
Money is a measure of societal status.
Money can be traded for goods and services.

Economics - Unit 2 Test Review Flashcards | StudBud