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