Unit 2: Free Market and Businesses all Mastery Tests

Which two of these statements explains how can international trade agreements lead to economic growth? by creating jobs in the export industries by opening up new markets for domestic goods by reducing competition between domestic industries by reducing expenditures on domestic production

by creating jobs in the export industries by opening up new markets for domestic goods

Which point on the graph shows minimum wage as the price floor?

(0,18) / 0 workers, $18 wages

A construction company plans to build a certain number of apartment buildings and stores on a piece of land. This PPC shows the combination of projects it can build. Scenario 1: If the company constructs 9 apartment buildings, the number of stores will be 3/4/5/6. Scenario 2: If the company is producing at point C, the opportunity cost of building 3 more stores will be 3/4/5/6 apartment buildings.

3, 6

What do individual shareholders gain when they buy shares of a company's stock? A. They gain partial ownership in the corporation. B. They gain the power to fix company stock prices. C. They gain the right to decide the business location. D. They gain discounts on the company's products.

A. They gain partial ownership in the corporation.

What are factors of production? A. all the human efforts involved in the production process B. all the resources used to produce any goods and services C. all the physical tools and equipment used in the production process D. all the naturally occurring resources found in land, air, and water

B. all the resources used to produce any goods and services

Approximately 200 people are working on developing a new community just outside a major city. Unlike other communities in the area, the development will feature innovative amenities such as solar powered houses, bike paths, and small, locally owned stores. The decision to include these amenities is an example of which factor of production? A. capital B. entrepreneurship C. labor D. land

B. entrepreneurship

What is productivity? A. quantity of input per unit of output B. quantity of output per unit of input C. quality of output per unit of input D. quality of input per unit of output

B. quantity of output per unit of input

The GDP of a country hasn't improved in the past three years. The central bank decided to take a measure that will increase the amount of money people spend on goods and services. Which step should the central bank take? A. increase interest rates B. reduce interest rates C. increase taxes D. increase the required reserve ratio E. increase the price of goods and services

B. reduce interest rates

Which phrase defines gross domestic product (GDP)? A. the difference of expenditures made importing goods and income earned from exporting goods B. the total monetary value of all the finished goods and services produced in a country in a given period C. the economic value of the professional skills and knowledge used in the production of goods and services D. the total investments made for the manufacture of domestic products and services in one year Reset Next

B. the total monetary value of all the finished goods and services produced in a country in a given period

What happens in the labor market? A. Unskilled people adopt skills for different jobs or professions. B. Different companies purchase capital. C. People who are willing and able to work offer their skills to firms for wages. D. People sell their produced goods and services to individual consumers.

C. People who are willing and able to work offer their skills to firms for wages.

A small community uses cattle as money. A man from the community traded five cows for a plot of farmland. Which characteristic of his money allowed him to make this transaction? A. divisibility B. uniformity C. acceptability D. durability

C. acceptability

Which market structure has a single company or seller in a market with many barriers to entry? A. oligopoly B. perfect competition C. monopoly D. monopolistic competition

C. monopoly

During wartime, a small country issued certificates to the public to raise money. Each certificate promised to pay the holder a certain amount in silver. After the war was over, the population continued exchanging these certificates instead of converting them to silver. What type of money did this economy use? A. commodity B. fiat C. representative D. precious metal

C. representative

The economy of a country has been growing at an annual rate of 8%. Determine the causes and effects of economic growth in this country. social and community development investment in physical capital improvement in standard of living investment in human capital

Cause of Economic Growth: - investment in physical capital - investment in human capital Effect of Economic Growth - -

These graphs represent the price and output quantities of purses under perfect competition and monopoly. Jackie wants to purchase five purses to give to her friends as gifts. How much more or less will Jackie pay overall for these five purses in a perfect competition than in a monopoly? A. $20 more B. $40 less C. $10 less D. $20 less

D. $20 less

What does market value of a good or service mean? A. loss incurred on a good or service B. profit incurred on a good or service C. cost of producing a good or service D. current price of a good or service

D. current price of a good or service

Which of the following is a characteristic of money? A. indivisibility B. variation C. limited life D. limited supply

D. limited supply

Which market structure predominantly uses product differentiation to attract consumers? A. oligopoly B. perfect competition C. monopoly D. monopolistic competition

D. monopolistic competition

What is the federal funds rate? A. the interest rate that the Federal Reserve charges commercial banks for overnight loans B. the interest rate that the Federal Reserve charges commercial banks for long-term loans C. the interest rate that banks charge each other for long-term loans D. the interest rate that banks charge each other for overnight loans

D. the interest rate that banks charge each other for overnight loans

Which strategy do companies use for their financial benefit? Outsourcing/Price floor/Productivity is a business strategy that companies use to reduce costs/savings/work.

Outsourcing, costs

Which statement describes investing in human capital to increase productivity? Monica, the CEO of Happy Ride, a cab service in Mexico, has retired from her position. Her successor, Janice, decides to give the company a makeover. To increase productivity, Janice introduces several changes. She notices that there's a higher demand for cabs on weekend nights, so she extends service hours from 12 hours to 24 hours on weekends. To strengthen brand recognition, she has all the cabs painted in the company colors. She even requires the drivers to wear a uniform with the company logo. Then she has a mobile app developed to turn Happy Ride into an app-based service. Recognizing the need to improve the customer experience, she introduces customer service and English language training for drivers.

Recognizing the need to improve the customer experience, she introduces customer service and English language training for drivers.

Which two sentences describe characteristics of a sole proprietorship? The owners are called partners. The owner accepts full financial liability. The business is treated as a separate tax entity. All profits go to the individual who owns the business.

The owner accepts full financial liability. All profits go to the individual who owns the business.

Which two sentences describe characteristics of a partnership? The owners are free from personal liability. The owners pool their resources to raise capital. The owners in a partnership are called members. The business benefits because owners can share responsibilities.

The owners pool their resources to raise capital. The business benefits because owners can share responsibilities.

Which statements indicate that Rick's company is a limited liability company? Rick Douglas is a bright and passionate lighting designer. Following his passion for innovative lighting solutions, he founded a company called Dazzle in 2000. Dazzle is a successful, small company with annual revenue of $25 million. It offers residential, commercial, and theatrical lighting solutions. Apart from Rick, there are several other owners in the company who have made tremendous contributions to its growth. The profits are shared in a fair manner among all owners. Because Dazzle is not a separate tax entity, all the owners declare revenue earned through the company on their personal federal tax returns. The success of the company turned Douglas and the other owners into millionaires. Rick has a villa in the prestigious Kimberly Hills area. The $5 million dollar villa is protected from business liabilities unless the liability is incurred through wrongful acts.

Because Dazzle is not a separate tax entity, all the owners declare revenue earned through the company on their personal federal tax returns. The $5 million dollar villa is protected from business liabilities unless the liability is incurred through wrongful acts.

Match each economic scenario with the correct economic term. A country can produce more units of good B without reducing the units of good A it produces. A country cannot produce more units of good A without producing fewer units of good B A country wants to produce 10 units of good A and 12 units of good B but can produce only 5 units of good A and 4 units of good B. efficiency underutilization unattainability

efficiency- A country cannot produce more units of good A without producing fewer units of good B underutilization- A country can produce more units of good B without reducing the units of good A it produces. unattainability- A country wants to produce 10 units of good A and 12 units of good B but can produce only 5 units of good A and 4 units of good B.

What steps can a nation take to achieve economic growth? invest in physical capital engage in international trade focus on increasing imports invest in human capital reduce the defense budget

invest in physical capital engage in international trade invest in human capital

Companies under monopolist/monopolistically competitive/oligopolistic/perfectly competitive market structures are interdependent. A cartel/Collusion/A price war/A trade union is a secret agreement among companies that may result from this interdependence.

oligopolistic, Collusion

Blue Ice Inc. is an American corporation. The company started out as a competition/corporation/partnership/sole proprietorship between Nick Selver and Rita Andrew in 1985. In 2001, the consumers/members/partners decided to dissolve/incorporate/nationalize/privatize their company so they could sell company stock on the farmers market/Internet/stock market. Blue Ice raised $10 billion with its IPO. It was one of the biggest IPOs of 2001.

partnership, partners, incorporate, stock market

What are Reserve Banks? Reserve Banks are commercial banks/investment banks/regional banks that help the central bank/government/state carry out its duties.

regional banks, central bank

A construction company plans to build a certain number of apartment buildings and stores on a piece of land. This PPC shows the combination of projects it can build. If the amount of land available to the company increases, the PPC will shift the left/shift to the right/remain unchanged. The company realizes it cannot construct any buildings on a portion of the land because it is at risk of a cave-in. In this case, the PPC will shift to the left/shift to the right/remain unchanged.

shift to the right, shift to the left

John is a producer in a perfectly competitive market structure. Identify the point where he will set his output.

the point in the middle, where the output and marginal points meet