Midterm Exam

Question 0

In a perfectly competitive market, goods are________ and firms are ______

Answer 0

homogenous; price takers

Question 1

Economic system that exists in the United States

Answer 1

mixed

Question 2

Woman who started first franchise

Answer 2

Martha Matilda Harper

Question 3

an organization owned and operated by members using its services

Answer 3

cooperative

Question 4

a business owned jointly by two or more people

Answer 4

partnership

Question 5

a business enterprise owned jointly by two or more people that exists for a limited amount of time or in order to complete a specific project

Answer 5

joint venture

Question 6

a business that has no more than 100 shareholders and meets strict IRS regulations which allow the taxes to “pass through”

Answer 6

S- Corporation

Question 7

a cost, or disadvantage of ______ is double taxation of the owners

Answer 7

C- Corporation

Question 8

what’s the outcome if the cost of production rises?

Answer 8

supply falls

Question 9

Competition among producers and sellers leads to higher prices while competition among consumers leads to lower prices. TRUE or FALSE?

Answer 9

False

Question 10

Competition led Henry Ford to produce an efficient production system while it lead Apple to produce an efficient delivery system for music. TRUE or FALSE?

Answer 10

True

Question 11

Marginal cost is the cost of producing an additional unit of output. TRUE or FALSE?

Answer 11

True

Question 12

The main motive of a for- profit business organization is to increase its revenue as much as it can. TRUE or FALSE?

Answer 12

False

Question 13

Collusion is illegal even if the product s a necessity such as water or fuels. TRUE or FALSE?

Answer 13

True

Question 14

At a given price, the amount of a good or service that a consumer is willing and able to buy is called…

Answer 14

quantity demanded

Question 15

what is it called when the market demand shifts?

Answer 15

change in demand

Question 16

3 things that create demand in the marketplace

Answer 16

consumers/households, businesses, governments

Question 17

All else being equal, the law of demand tells us that when the price of a good or service decreases, the quantity consumers demand will___

Answer 17

increase

Question 18

what is a shareholder?

Answer 18

someone who holds stock in a corporation

Question 19

What is it called when quantity supplied and quantity demanded are equal?

Answer 19

market equillibrium

Question 20

S.W.O.T

Answer 20

strengths
weaknesses
opportunities
threats

Question 21

When there aren’t many businesses in the competitive market.
Ex. cereal industry

Answer 21

oligopoly

Question 22

When one company dominates the entire competitive market.

Ex. power companies

Answer 22

monopoly

Question 23

A lot of companies are competing against each other, but are creating similar goods.
Ex. fast food resturants

Answer 23

monopolistic competition

Question 24

Business that is owned by a lone individual Benefits: THE IHO Costs: limited ways to raise capital, unlimited liability

Answer 24

sole- proprietorship

Question 25

What sets a LLC apart from the rest of the types of businesses?

Answer 25

the liability does not apply to personal assets of the individual members

Question 26

business in which there is a relationship between the owner of a trademark and an individual

Answer 26

franchise

Question 27

Cost vs. Price

Answer 27

price is how much the consumer pays for a good or service | cost is how much spent on inputs

Question 28

revenue vs. profit

Answer 28

revenue is the income generated by the sale of goods and services profit is how much the producer makes after all the costs are subtracted

Question 29

ratio of total cost or revenue or profit to the number of outputs sold

Answer 29

average cost

Question 30

additional cost or change in total cost when adding an extra output

Answer 30

marginal cost

Question 31

a good in which all units are the same

Answer 31

homogenous good

Question 32

a good that performs a similar function but differs in another area

Answer 32

heterogenous goods

Question 33

an individual or company that is not influential enough to affect the price of an item

Answer 33

price takers

Question 34

Law of demand states...

Answer 34

that everything else being equal, as the price of a good or service increases, the quantity demanded for that good or service increases

Question 35

Determinants of demand

Answer 35

``` income tastes and preferences number of buyers prices of related good or services consumer expectations ```

Question 36

Law of supply states...

Answer 36

that if everything else is the same, producers will increase the quantity supplied at higher prices and decrease it at lower prices

Question 37

Determinants of supply

Answer 37

``` resource prices production conditions price of related goods expectations number or suppliers ```

Question 38

what causes changes in the market equilibrium?

Answer 38

a surplus or shortage

Question 39

physical capital includes...

Answer 39

tools and machines

Question 40

In Adam Smith's "Wealth of Nations," he finds that...

Answer 40

the role of the govt. should be limited but should provide for public works and protection of private ownership

Question 41

factors of production

Answer 41

natural human capital

Question 42

Entrepreneurs always accept ___

Answer 42

risks

Question 43

Factor demand is a ____

Answer 43

derived demand

Question 44

output per worker per unit of time

Answer 44

productivity

Question 45

when a country buys goods from another country

Answer 45

imports

Question 46

when a country sells goods to another country

Answer 46

exports

Question 47

how many hours of labor a firm is willing to hire

Answer 47

labor demand

Question 48

Only a few variables such as labor, raw materials and wages can be changed in the ____

Answer 48

short run

Question 49

All variables can be changed in the _____

Answer 49

long run

Question 50

when both parties are willing and agree to exchange a product for an agreed upon value

Answer 50

voluntary exchange

Question 51

The Law of Diminishing Returns states...

Answer 51

there is a point where an additional laborer will decrease average production, and that marginal returns can eventually be negative

Question 52

a measure of the production inputs based on the production outputs (vice versa)

Answer 52

production function

Question 53

Households want to maximize their ______ and firms want to maximize their _____.

Answer 53

utility or satisfaction; profit

Question 54

trade surplus

Answer 54

imports < exports

Question 55

trade deficit

Answer 55

imports > exports

Question 56

In factor markets, _____ sell factors of production and ____ purchase them.

Answer 56

Households; firms

Question 57

Economics is the study of...

Answer 57

how goods and services are allocated when dealing with the issue of scarcity

Question 58

shows the maximum combination of two goods that can be produced when all resources and the best technology is used

Answer 58

Production Possibilities Frontier

Question 59

What type of market did Milton Friedman think was best?

Answer 59

free- market

Question 60

3 basic economic questions

Answer 60

What goods and services should be produced? How much? For whom?

Question 61

2 assumptions economics makes about peoples behavior

Answer 61

people are self- interested | people are rational

Question 62

PACED

Answer 62

``` define a Problem list the Alternatives identify Criteria Evaluate make a Decision ```

Question 63

the degree to which buyers and sellers respond to price change

Answer 63

elasticity

Question 64

a legal max on the price at which a good can be sold

Answer 64

price ceiling

Question 65

a legal minimum on price at which a good can be sold

Answer 65

price floor