Business Chapter 3
What are capital goods?
Are building tools, machines, and other equipment used to produce other goods but do not directly satisfy human wants.
What is a consumer good and service?
Are the goods and services that directly satisfy people's economic wants.
Economic growth occurs when a country produces goods and services at: A) The same rate the population is increasing B) A faster rate than the population is increasing C) A slower rate than the population is increasing D) The same rate unemployment is increasing
B) A faster rate than the population is increasing
Machines used to make automobiles are classified as: A) Consumer goods B) Capital goods C) Consumer services D) Domestic goods
B) Capital goods
What type of economy is most typically found in China? A) Capital B) Command C) Market D) Mixed
B) Command
Nonprice competition occurs when a firm: A) Takes business away from its competitors by lowering the prices B) Conducts an extensive advertising campaign to convince the public that its product is better than all other brands C) Does not have to compete with other sellers for consumer dollars D) Occurs only when service is provided
B) Conducts and extensive advertising campaign to convince the public that its product is better than all other brands
Businesses and individuals own natural resources and capital goods: A) Command economy B) Market economy C) Mixed economy
B) Market economy
Marketing decisions are made by market conditions: A) Command economy B) Market economy C) Mixed economy
B) Market economy
A period just before the unemployment rate starts to climb: A) Expansion B) Peak C) Contraction D) Trough
B) Peak
You dash into a bookstore on your lunch hour and ask for this weeks best selling novel name, which the clerk has in stock. What king of utility is this? A) Form B) Place C) Time D) Possession
B) Place
Some industries owned by government but consumers decide what other goods are produced: A) Capitalism B) Socialism C) Communism
B) Socialism
Bulldozer for building contractors: Capital or consumer good
Capital good
Factory: Capital of consumer good
Capital good
Machines for making bicycles: Capital of consumer good
Capital good
Garden hose: Capital or consumer good
Consumer good
Home: Capital of consumer good
Consumer good
What happens when a good or service is privatized?
Costs increases and efficiency decreases.
You have just completed signing the rental form for the use of a portable computer to take on a business trip. What kind of utility is this? A) Form B) Place C) Time D) Possession
D) Possession
A period called depression: A) Expansion B) Peak C) Contraction D) Trough
D) Trough
A period when unemployment is at its worst: A) Expansion B) Peak C) Contraction D) Trough
D) Trough
As Consumer Price Index (CPI) increases, does the purchasing power of the dollar increase, decrease or stay the same?
Decrease
A college graduate plans to purchase on credit several new business suits, which will be needed when reporting to a new job in several weeks. Is this a demand or a want?
Demand
An apartment dweller is waiting for the next big sale so that a vacuum cleaner that is nearly worn out can be replaced. Is this a demand or a want?
Demand
Reducing government spending for defense: A) Speeds economic growth B) Slows economic growth C) No effect on economic growth
Slows economic growth
What are the differences between socialism, capitalism, and communism?
Socialism: System in which the government controls and regulates the means of production. Capitalism: System in which private citizens are free to go into business, produce and distribute for themselves. Communism: Forced socialism where all/almost all of the productive resources of a nation are owned by the government.
Increasing government spending for transportation: A) Speeds economic growth B) Slows economic growth C) No effect on economic growth
Speeds economic growth
Lowering federal income taxes: A) Speeds economic growth B) Slows economic growth C) No effect on economic growth
Speeds economic growth
What is supply and demand?
Supply: The number of like products that will be offered for sale at a particular time and at a certain price. Demand: The number of products that will be bought at a given time at a given price.
Are capital goods needed to produce consumer goods and services?
Yes
Can a change in the demand or supply of a product cause a change in the price of a product?
Yes
Do consumers help decide what will be produced as well as how much will be produced ?
Yes
Does a retailer grocer provide both time utility and place utility?
Yes
Does the lowering and raising of taxes by the federal government aid in controlling recession and inflation?
Yes
Is inflation accompanied by a decline in the purchasing power of money?
Yes
Is the body of knowledge that relates to producing and using goods and services to satisfy human wants known as economics?
Yes
When the GDP is growing at a desirable rate, is the CPI likely to be increasing as well?
Yes
Will a decrease in production and an increase in unemployment occur during recessions?
Yes
Is a robot on a car assembly line an example of a consumer good?
No
Is competition among businesses limited mainly to price competition?
No
Is it necessary to expand only the production of goods and services for economic growth to occur?
No
Launching a new satellite to the planet Venus: A) Speeds economic growth B) Slows economic growth C) No effect on economic growth
No effect on economic growth
Passing a new law to lower the voting age: A) Speeds economic growth B) Slows economic growth C) No effect on economic growth
No effect on economic growth
What types of people are hurt most by rapid increases in CPI?
Retired people or people with fixed incomes
Raising federal income taxes: A) Speeds economic growth B) Slows economic growth C)No effect on economic growth
Slows economic growth
What is the difference between a demand and a want?
A demand is something that you want, have enough money for, and are destined to buy it. A want is something that you think you need but you haven't fully committed on buying it or have not saved enough money for.
What is a command economy?
A system in which the the method of determining what, how, and for whom good and services are produced are decided by the government.
Approximately what percent of total receipts represents the average net profit of all business firms? A) 5% B) 10% C) 15% D) 25%
A) 5%
Freedom to own land and other property: A) Capitalism B) Socialism C) Communism
A) Capitalism
Nearly any individual can start a business: A) Capitalism B) Socialism C) Communism
A) Capitalism
Resources are allocated by government only: A) Command economy B) Market economy C) Mixed economy
A) Command economy
A period of high unemployment and rising wages and prices: A) Expansion B) Peak C) Contraction D) Trough
A) Expansion
A period of runaway inflation: A) Expansion B) Peak C) Contraction D) Trough
A) Expansion
You go to a nearby store to buy a canvas walking shoe, but the store carries leather only. What kind of utility is this? A) Form B) Place C) Time D) Possession
A) Form
A shoe manufacturer creates: A) Form utility B) Time utility C) Place utility D) Economic utility
A) Form utility
What is a mixed economy?
An economic system in which a combination of a market and command economy are blended together.
The Consumer Price Index (CPI) is best defined as: A) The total market value of all goods produced and services purchased in a year B) The total of all the products that are purchased at a given time C) A measure of the average change in prices of consumer goods and services D) The same as the Economic Index of Leading Indicators
C) A measure of the average change in prices of consumer goods and services
Prices are determined by the forces of: A) Supply only B) Demand only C) Both supply and demand D) Business cycles
C) Both supply and demand
When the production of consumer goods decreases, the productions of: A) Capital goods increase B) Capital goods and services increase C) Capital goods decrease D) Capital goods and services decrease
C) Capital goods decrease
The term that best describes our present economic/political system is: A) Socialism B) Communism C) Capitalism D) Privatization
C) Capitalism
Government decides how and what goods are to be produced: A) Capitalism B) Socialism C) Communism
C) Communism
Usually shortage of consumer goods: A) Capitalism B) Socialism C) Communism
C) Communism
A period when prices stop rising and graduates begin to find it more difficult to land jobs: A) Expansion B) Peak C) Contraction D) Trough
C) Contraction
Which of the following is NOT likely to occur during a recession? A) Decreased production B) Increased unemployment C) Increased demand for goods and services D) Rapid rise in the CPI
C) Increased demand for goods and services
In which type of economy do consumers and producers act independently to determine what, how, and and for whom good and services are produced? A) Communistic B) Command C) Market D) Mixed
C) Market
China is a good example of this economic system: A) Command economy B) Market economy C) Mixed economy
C) Mixed economy
Government controls business decisions extensively for the allocation of some resources, but little over distribution: A) Command economy B) Market economy C) Mixed economy
C) Mixed economy
The basic factors of production are: A) Natural resources and labor B) Natural resources, labor, and capital goods C) Natural resources, labor, capital goods, and management D) Capital goods and labor
C) Natural resources, labor, capital goods, and management
Demand for a product is the: A) Same as want B) Price at which product will sell most readily C) Number of products that will be bought at a given time and at a given price D) Number of future customers
C) Number of products that will be bought at a given time and at a given price
You were planning to walk home after a movie, but it is raining so you look for a taxi. One pulls up as you leave the theater. What kind of utility is this? A) Form B) Place C) Time D) Possession
C) Time
Which of the following is NOT considered an economic want? A) Want for a television set B) Want for medical attention C) Want for friendship D) Want for new clothing
C) Want for friendship
What is place utility?
If the product you want is in a nearby store where it can be purchased.
What is time utility?
If the store is open when you are ready to buy a product.
What is form utility?
If the thing you want to buy is available in the style and color.
As the demand for a product decreases, does the price of of the product usually increase?
No
Can a country produce as many capital goods as it wishes to produce any one at any one time?
No
Does our economic system concern itself with all the wants of the people?
No
Does privatization occur when a company provides a good or service that was formally provided by a business?
No
During inflation, does the dollar buy more than it did before inflation?
No
If the production of consumer goods increases, must the production of capital goods and services also increase?
No
Is a glass of water an economic want?
No
Is a recession a slowdown, or decline in the GDP that continues for 3 months or more?
No
Are increases in CPI a measure of the rate of inflation, recession, or depression?
Inflation
What is possession utility?
Is the product available at a price you can afford and are willing to pay.
Are countries that normally adopt a market economy often dictatorships?
No
What happens in a recession?
The decline in the GDP that continues for 6 months or more.
What is capital formation?
The production of capital goods.
What is inflation? what happens when inflation occurs?
The rapid rise in prices caused by an inadequate supply of goods and services. When inflation occurs prices rise for goods and services.
A small business owner would like to install a new, plush rug in the customer waiting room but has not fully decided whether to spend that much money on it. Is this a demand or a want?
Want
A youngster would like to buy a particular toy but does not have quite enough money to buy it. Is this a demand or a want?
Want