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Business Review
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For High School Economics
Flashcards
40 cards
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Questions
40
Answers
1
Which of the following is always true about a stock whose price went down?
The company reported a decline in profits.
The stock is a poor investment.
It is time to sell the stock.
There were more sellers than buyers of the stock.
2
Diseconomies of scale occurs when . . .
You are inefficient because your are too large
All of these
Profits go down
Revenue goes down
3
What is the primary reason most people buy stocks?
Hope to earn dividends
Hope to sell later at a higher price
None of these
To have voting power in the company
4
Why would a monopoly be bad for customers?
Lower Quality
All of these
Lack of Choice
Higher prices
5
What type of barrier to entry improves product function the more people use it?
All of these
Intanglible Assets
Network effect
Economies of Scale
6
Which do you like better, Coke or Pepsi?
Coke
Both
Pepsi
Neither
7
Which costs are Variable to a Pizza Restaurant?
Advertising
Tables and Chairs
The printed and laminated menus
Tomato Sauce
8
Which represents a list of 30 industrial U.S. companies in a variety of industries?
Dow Jones Industrial Average
SEC
NASDAQ
NYSE
9
What is non-price competition?
Product is a commodity
My price is lower than your price!
Differentiation
All of these
10
An example of Variable Costs:
Plastic for a toy manufacturer
All of these
The products that are being sold
Tomato sauce for a pizza place
11
What is a Stock Index?
Gives a snapshot of the stock market
Bull or a bear market
All of these
Measures how well or how bad the stock market is doing
12
Why would a business need to know about average costs?
All of these
So they can accurately price their products
They don't need to know average costs
None of these
13
Oligopolists can descend into Perfect Competition if a Price War breaks out.
True
False
14
What are Fixed Costs?
Costs that don't change based on sales
Costs that vary based on Quantity Produced
Sales costs
Implicit Costs
15
What are Variable Costs?
Costs that are fixed
Costs that don't vary at all
Implicit costs
Costs that vary based on Quantity produced
16
Why differentiate your products?
To be able to have more sales and discounts
None of these
Both of these
To create an elastic demand curve
17
How do businesses protect profits from competitors?
Differentation
Economic Moats
All of these
Barriers to Entry
18
If a person has no time to shop around for a better price, they are . . .
Price Elastic
an idiot
None of these
Price Inelastic
19
If an investor buys a stock with a dividend it means that
the stock will most likely go up in value.
the company distributes profits to the shareholders.
the stock is a long term investment.
It reinvests all profit back into research & development
20
An example of Fixed Costs:
Paper for a copying business
Lemonade for a hot dog stand
Parking lot for a business
Waiters at a restaurant
21
Which market structure has a lots of firms selling the same product?
None of these
Pure Oligopoly
Differentiated Competition
Perfect Competition
22
An industry where there is a Monopoly because there are high start up costs like utilities.
Natural monopoly
Monopsony
Intrinsic Monopoly
Duopoly
23
Which of these is NOT a factor of elasticity for demand?
% of Income
Need vs. Luxury
Price of Substitutes
Availability of substitutes
24
Which type of market has a homogenous product but only a few firms controlling the market?
Pure Oligopoly
Monopoly
Monopolistic Competition
Differentiated Oligopoly
25
A firm that merges with another firm:
The market becomes less concentrated
Neither of these
The market become more competitive
Both of these
26
Why are perfectly competitive markets only expected to earn normal profits in the long run?
No differentiation
Must price products according to equilibrium
Easy to get in an out of the market
All of these
27
What happens when a firm gets more efficient as they get larger in size?
All of these
High Fixed costs become less and less per unit sold
Mass Production
Economies of scale
28
What barrier to entry is Wal-Mart primarily taking advantage of?
Both of these
None of these
High Customer Switching Costs
Economies of Scale
29
Why do businesses care about total costs?
They want to know how much money they might be making
They want to know how much money they might be losing
So they know how much money they need to spend
All of these are helpful for entrepreneurs to know
30
Inelastic demand does what for firms?
Allows firms to increase price without losing customers
Firm has brand identity
All of these
Is a result of differentiation
31
What is Economic Profit?
Breaking Even
Shutdown
Just like Normal Profit
Revenue is greater than costs
32
A natural Monopoly . . .
all of these
Has high start-up costs
Economies of scale only work for one firm
It is not efficient to have competition
33
If a business wants to produce higher quantities but lower average costs, how is that done?
You have to lower quantity
Become more inefficient
All of these
Expand
34
Can Fixed costs vary?
Yes, but not b/c of changes in quantity
Yes.
Yes, b/c it is fixed only in relation to quantity
All of these
35
What happens when firms effectively build barriers to entry?
There are fewer firms in the market
Businesses can set price above equilibrium
Products demand is inelastic
All of these
36
What type of market has few firms and lots of differentiation and price leadership?
Differentiated Oligopoly
Differentiated Competition
Monopoly
Pure Oligopoly
37
Why are entrepreneurs content to earn normal profit in the long run?
Because all costs are paid for, including their salary
Because Normal profits means revenue is greater than costs
Because normal profit means you are making lots of money
Because breaking even is cool and entrepreneurs are lazy
38
Why would a business incorporate and create shares of stock for sale?
To make money from the sale of stock
None of these
All of these
To limit liability
39
When firms in an oligopoly lower price, a price war can break out. How can a firm legally avoid this?
Cartel
Price Signaling
None of these
Collusion
40
Which of the following is a major advantage of the corporate form of business?
the limited liability of the owners
lower taxes
the ease and inexpensiveness of starting one
fewer regulations
