Have an account?
Skip to Content
Build your own quiz
Suggestions for you
26 questions
Show Answers
See Preview
- 1. Multiple Choice
Which of the following is the BEST example of a product market transaction?
Cindy provides labor at her part-time job at a grocery store bakery.
Cindy gets ingredients at the grocery store to make cookies for her family
Cindy gives her manager cookies as a thank you for giving her time off for a family vacation.
Cindy gets ingredients at the grocery store to make cookies for her home-based catering business.
- 2. Multiple Choice
How do businesses get factors of production according to the pure market circular flow of economic activity?
from households through the resource market
from government through the resource market
from government through the product market
from households through the product market
- 3. Multiple Choice
Which TWO situations could economists illustrate as a factor market transaction on a pure market circular flow diagram?
A student receives wages for working as a line cook at a fast-food restaurant.
A mother puts part of her income into a college savings account for her son.
A patient uses health insurance to pay for long-term hospitalization.
A teacher receives wages for his or her job at a public school.
A man rents his land to an oil company.
- 4. Multiple Choice
Based upon a circular flow diagram, how do businesses receive revenue from households?
in the factor market as a payment for resources
in the product market as a payment for resources
in the factor market as a payment for goods and services
in the product market as a payment for goods and services
- 5. Multiple Choice
Andy works for Mama's Pizza restaurant. He delivers pizzas on the weekend. Andy does not work during the week; however, he orders pizza from the restaurant each Monday when he is home alone. His work colleague, Ted, delivers the pizzas on Mondays.
Which describes the difference between Andy’s factor market and product market transactions?
Andy acts as a firm in the product market when he sells his labor, while he acts as a household in the factor market when he buys the good of pizza.
Andy acts as a firm in the product market when he sells pizza to customers, while he acts as a household in the factor market when he buys the good of pizza.
Andy acts as a firm in the product market when he buys the labor of Ted who delivers pizza to him, and also acts as a firm in the factor market when he sells the good of pizza to customers.
Andy acts as a household in the product market when he buys the good of pizza from the restaurant, and also acts a household in the factor market when he sells his labor to the restaurant on the weekends.
- 6. Multiple Choice
WhichTWO economic situations could be explained using the circular flow model of resources, money, and goods and services?
Government spending increases leading to inflation.
The demand for all goods and services decreases leading to deflation.
The production possibilities of an economy increase leading to economic growth.
Firms increase wages leading to an increase in household funds available for consumption.
Consumption expenditures on goods and services increase leading firms to buy more factors of production.
- 7. Multiple Choice
Which of the following BEST defines the law of supply?
Producers will provide more goods and services as prices increase.
Producers will provide fewer goods and services as prices increase.
Consumers will purchase more goods and services as prices increase
Consumers will purchase fewer goods and services as prices increase.
- 8. Multiple Choice
Which of the following BEST describes where market clearing price is found on a supply and demand graph?
The point can be found at any point where supply exceeds demand.
The point can be found at any point where demand exceeds supply.
The point can be found where the supply curve and demand curve intersect.
The point can be found at any point above the intersection of supply and demand.
- 9. Multiple Choice
The price in the orange juice market increases. People decide to buy less orange juice and drink something else instead.
What economic law does this BEST illustrate?
law of supply
law of demand
law of diminishing returns
law of diminishing marginal utility
- 10. Multiple Choice
What causes a change in the quantity supplied and the supply for a product?
A change in the product’s costs of production causes both a change in quantity supplied and a change in supply.
A change in the product’s price causes a change in quantity supplied; a change in the product’s market conditions causes a change in supply.
A change in the product’s price causes a change in quantity supplied; a change in the product’s demand causes a change in supply.
A change in the product’s market conditions causes a change in quantity supplied; a change in the product’s costs of production causes a change in supply.
- 11. Multiple Choice
The cost of lemons increases.
Which of the following will happen in the lemon
market?
The demand for lemons will increase
The demand for lemons will decrease.
The quantity demanded of lemons will increase
The quantity demanded of lemons will decrease.
- 12. Multiple Choice
Why do sellers want a high market clearing price?
to have lower variable costs
to make the most revenue possible
to improve the business reputation
to set a high initial offering price for their product
- 13. Multiple Choice
Which of the following is an example of the law of supply?
As the price of fidget spinners decreases, consumers buy fewer fidget spinners.
As the price of fidget spinners increases, consumers buy fewer fidget spinners.
As the price of fidget spinners decreases, fidget spinner producers increase production.
As the price of fidget spinners increases, fidget spinner producers increase production.
- 14. Multiple Choice
Why does the supply curve slope upward?
as price increases the quantity supplied increases
as price increases the quantity supplied decreases
as price increases the quantity supplied is not predictable
as price increases the quantity supplied remains the same
- 15. Multiple Choice
Where is equilibrium quantity located on a supply and demand graph?
The point on the horizontal axis which would intersect with the supply curve.
The point on the vertical axis which would intersect with the demand curve.
The point on the vertical axis which would intersect with a line drawn through the point at which the supply and demand curves meet.
The point on the horizontal axis which would intersect with a line drawn through the point at which the supply and demand curves meet.
- 16. Multiple Choice
Recent newspaper headline read: "New laws on the car industry effect car producers"
What will happen to the equilibrium price of cars based on the change in market conditions discussed in the headline if all other things are held constant?
Supply will increase, so equilibrium price will increase.
Supply will increase, so equilibrium price will decrease.
Supply will decrease, so equilibrium price will increase.
Supply will decrease, so equilibrium price will decrease.
- 17. Multiple Choice
Population of Town T increases 25%.
What will MOST LIKELY happen to Town T’s fast food market?
The supply of fast food will decrease
The demand for fast food will increase
The quantity supplied of fast food will decrease.
The quantity demanded of fast food will increase.
- 18. Multiple Choice
What happens in a market when suppliers set prices higher than equilibrium and will not adjust to the market?
There is a surplus of the good.
There is a shortage of the good.
There is a decrease in equilibrium quantity.
There is a decrease in demand for the good.
- 19. Multiple Choice
How is the number of owners in a corporation determined?
by the number of managers
by the size of the corporation
by the number of shareholders
by the articles of incorporation
- 20. Multiple Choice
Why might an entrepreneur choose to establish a sole proprietorship rather than a partnership?
They may want to have limited liability
They may want to avoid double taxation.
. They may want to have an unlimited lifespan.
They may want to avoid shared decision-making.
- 21. Multiple Choice
Rafael works from home as a journalist and sells his writing to different organizations. It is important to him to decide for himself what to write about and to set his own schedule.
What is the greatest disadvantage of Rafael's type of business organization?
full ownership
double taxation
unlimited liability
unlimited lifespan
- 22. Multiple Choice
Eric and Luis are in a general partnership. They own and operate a catering business. Luis wants to incorporate. He is trying to convince Eric that the benefits outweigh the costs. Eric is concerned that he will not receive as much income if they incorporate.
What argument would Luis MOST LIKELY use to convince Eric of the benefits of incorporation?
Incorporating would protect our personal assets from business debts.
Incorporating would give us more control over business decisions.
Incorporating would provide our business an unlimited lifespan.
Incorporating would reduce our tax burden
- 23. Multiple Choice
Which market structure has no ability to set prices?
oligopoly
monopoly
pure competition
monopolistic competition
- 24. Multiple Choice
Which two market structures have the highest barriers to entry?
monopoly and oligopoly
perfect competition
oligopoly and monopolistic competition
perfect competition and monopolistic competition
- 25. Multiple Choice
Product G has many competitors, and there is no way to differentiate Product G from the competitors. Therefore, the makers of product G cannot exercise control over price.
Which type of market structure does product G have?
Monopoly
Oligopoly
Perfect competition
Monopolistic Competition
- 26. Multiple Choice
How are oligopolies and monopolistic competition similar?
They are both market structures that have few sellers.
They are both market structures that have limited price control.
They are both market structures that have high barriers to entry.
They are both market structures that have a lot of product differentiation.
- Answer choicesTagsAnswer choicesTags