Principles of Economics Review

A couple constructs a decision matrix to select which charity will receive a $500 donation. Since "helping children" is the most important criteria to the couple, which of the following weights should it be assigned?

.60

Which of the following factors affects consumers' decisions to buy goods or services:

Buying power

Why are human resources limited?

Some people are unable to work.

If interest rates go down, which of the following would most likely occur:

Spending will increase.

What is one of the main reasons why governments levy taxes?

To raise revenue

Sam has been invited to go to the movies with one friend and to Dairy Queen for ice cream with another friend. Because he has only $5.00, Sam can't do both. If he decides to go the movies, the opportunity cost of his choice is

ice cream at Dairy Queen.

When producers are hopeful about the economic business outlook, they often

increase their investment in capital goods.

The best time for a business to purchase new equipment is when

interest rates are low.

The value of a country's currency declines when it implements policies that restrict trade. The primary factor affecting the change in value of the currency in this situation is

isolationism.

When union members of Local 654 arrived at work today, they found a sign on the door stating that the business had closed temporarily and the employees were not allowed to work. This is a pressure strategy known as a(n)

lockout.

The formula that is generally used to measure productivity is

outputs divided by inputs.

Justin is trying to decide whether he wants to spend a $50 birthday check on a new DVD player or tickets to a concert. If he chooses the DVD player, what is the opportunity cost of this decision?

Concert tickets

A group of entrepreneurs is trying to decide which of five new product ideas to select. Which tool can be used to help make the decision?

Decision matrix

Which of the following is a decision about production that a business might make based on the law of diminishing returns:

Establish a desired level of production

What type of government policy involves raising or lowering taxes, and increasing or decreasing government spending?

Fiscal

Which of the following might cause supply of a good to decrease:

Government regulations

Which of the following is a negative economic incentive:

High taxes on cigarettes

What is a likely result when workers' wages rise throughout the economy while productivity decreases?

Inflation

What do businesses usually expect will increase when the economy experiences a continued rise in the level of inflation?

Interest rates

Which of the following is characteristic of a buyer's market:

Low prices

What is likely to occur when the inflation rate increases, and workers do not receive pay increases?

Lower standard of living

Which of the following government actions is most likely to stimulate the economy:

Lowering tax rates

John only had $40 to spend and couldn't decide whether to buy a new pair of jeans or to go to an amusement park. He finally decided to spend his money on the amusement park. What was the opportunity cost of his decision?

New pair of jeans

During which phase of the business cycle would there most likely be competition for workers in certain skill areas?

Peak

In which of the following occupations would employees be organized into craft/trade unions:

Plumber

Which of the following is an example of excess supply:

Price = $700, demand = 300, supply = 500

Which of the following is an economic activity:

Purchasing a candy bar

Which of the following is a business comparing when it analyzes the cost of buying wood desks versus the cost of buying metal desks:

Relative price

The primary purpose of a feasibility study is to answer which of the following questions:

Should we proceed with this project?

Which of the following is a program that some managers implement to achieve quality in all aspects of the business:

Six Sigma

What usually results when interest rates continue to increase?

Spending decreases.

Which of the following is an example of a change in culture affecting the production of a good or service:

The "green movement" leads to an increase in demand for recycled products.

Which of the following is true when a potato farmer keeps some of the farm's potatoes for personal use:

The potatoes are not counted in the gross domestic product.

What is the effect on society of a falling growth rate in productivity?

The standard of living drops.

Why are resources considered limited?

There are not enough available so that everyone can have as much of them as desired.

Why do most businesses use some type of quality control method at work?

To minimize errors

Why should productivity be measured?

To see whether the business's objectives are being met

How long do most business cycles last?

Varying lengths of time

Which of the following represents a good time for a country's government to use its fiscal policy to increase taxes:

When inflation is too high

What kind of strike occurs when the members of a union local stop work without the consent of their national organization?

Wildcat

Which of the following is an example of paradigm innovation:

Windows computer operating system

To reduce the chance of investigations and orders to cease production, businesses should

adhere to government regulations.

When assessing global trends for potential business opportunities, an entrepreneur often looks for a market that has

an unmet want.

When management and union leaders negotiate but cannot reach an agreement, either one may call for a(n)

arbitrator.

The payment of taxes to the federal government allows it to provide goods and services to ___________ and ___________ .

businesses; households

The use of robots in assembly-line work is a form of specialization involving

capital goods.

The amount of a product that is produced is most directly affected by

consumer demand.

Ongoing efforts within a hospitality operation to better meet or exceed guests expectations relates to the emphasis on:

continuous quality improvement

When consumers' purchasing power decreases, the economy will experience a period of

contraction

Technological advances may increase the chance of job obsolescence. For workers, this is a(n) __________ labor specialization.

disadvantage of

When changes in a product's price cause corresponding changes in consumer demand, the product has

elastic demand.

When customers buy the exact amount of goods that producers are selling at a specific price, the __________ price exists.

equilibrium

When consumers purchase gasoline, telephone services, and tobacco products, they must often pay a(n) ___________ tax.

excise

When consumer spending and consumption decrease, consumer confidence tends to

fall

The highest level of labor union organization is the

federation

Higher prices that result from a tax on luxury goods are likely to result in

fewer customers and less productivity.

When consumer spending is high, the economy usually is in a(n)

growth stage

The young children's section of a U.S. amusement park features cartoon characters from a German TV show. Although the amusement park signed an agreement and paid a fee to display images of the cartoon characters, the TV show doesn't own or manage the park in any way. This is an example of

licensing.

Arm and Hammer baking soda, which was originally developed as a cooking ingredient, is now being sold as an effective refrigerator deodorizer. This is an example of ____________ innovation.

positioning

The market's way of rationing limited resources, goods, and services to consumers in a market economy is through

prices

When applying the law of diminishing returns, businesses know that there is a point at which production

reaches its maximum level.

A six-month decline in GDP is known as a

recession.

One of the main functions of a country's monetary policy is to

regulate the economy.

One way for a business to increase productivity is to increase its

research and development.

Entrepreneurial discovery is an important process in a free-enterprise economic system because an entrepreneur or small-business owner can

satisfy an unmet demand.

Vernon was the milkman in his neighborhood for 30 years. Then, supermarkets started selling milk right in the store, and Vernon's job became obsolete. Vernon is a victim of ___________ unemployment.

structural

When a currency appreciates in value compared to other currencies, then

that country's goods become more expensive to the rest of the world.

The gross domestic product (GDP) is calculated each year in the United States to determine

the health of the economy.

A large number of underemployed workers indicates that there is a problem in the economy because underemployment means that

there are not enough jobs for qualified people.

The use of thorough job orientation helps to increase productivity through

training and education.

An automobile assembly line currently has 75 cars being assembled. These partially-complete cars are considered

work in process.

Mary is a bagger at Glen's Market. On a weekly average, she works 30 hours and fills 876 bags of groceries. Her productivity is ___________ bags of groceries per hour.

29.2

If three employees each work 35 hours a week and produce a total of 9,765 items, what is their total hourly productivity level?

93

Which of the following statements is true regarding a nation's unemployment rates:

A nation always has a certain percentage of unemployed citizens at any given time.

A U.S. company begins selling its products in France. Despite brisk sales, the company doesn't make enough profit to cover its expenses. When setting prices, the company simply used the same prices in both countries. For example, $5.99 = 5.99 French francs; $2.89 = 2.89 French francs. What risk of international business did the company not consider?

Currency fluctuations

What is often the result when businesses are able to achieve and maintain a quality culture?

Customer satisfaction

What is the ratio of a pound of yellow squash @ $ .40 a pound and a pound of butternut squash @ $1.20 a pound?

1 to 3

Which of the following does consumption rely on to provide goods and services:

Producers

In some states, it is against the law to sell alcohol on Sundays. This law was created to honor the Christian religious belief that Sunday is a special day of rest. This is an example of culture impacting the __________ of goods.

distribution