Why is there no competition in a monopoly?

There are no close substitutes.

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

there would be a surplus of widgets

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

Businesses would experience all of these economic outcomes.

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

the introduction of new technology

To have demand, what must you have

the desire and the ability to pay for the item.

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

Sarah would be liable for all costs and damages.

Which markets compete in non-price competition?

monopolistic competition and oligopoly

Which of these statements is TRUE of complementary products?

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

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

the demand for Twinkie-Doodles has increased.

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

What would be a disadvantage of getting a partner?

Have to share all of the profits with the partner.

What are some of the usual barriers to entry?

licenses, patents, high start up costs

Which is LEAST likely an advantage to a corporation?

establishment of price ceilings

Which scenario best represents monopolistic competition?

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

Which determinant MIGHT increase supply in the market?

an increase in the number of sellers of a product

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

The increase in the cost of resources.

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.

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.

The Law of Supply states that

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

How can firms engage in non-price competition?

Coupons and convenient locations

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

many firms selling identical items

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

Economics - Unit 2 Test Review Flashcards | StudBud