2017 First Semester Practice Exam Mrs.Litton

Who answers the basic economic questions in a private enterprise economic system

businesses and individuals

For each new product it offers, a business seeks

buyers

Maintenance, modifications, and use of alternative sources are responses to limited

capital goods

Which of the following economic resources helps people to be more productive:

capital goods

The government controls the economic system and does not allow private ownership of the means of production and distribution in a __________ economy.

communist command

When a rival's product on the market reduces sales of your company's product, your company is experiencing strategic risk caused by

competition

Which of the following is one of the main principles of the private enterprise system:

competition

The heart of economics is

decision making

The price of complementary products has an effect on

demand

Burger King and McDonald's are examples of

direct competitors

One of the ways that competition benefits customers is by encouraging businesses to

improve their existing products

A popular product is said to be

in demand

An economic good or service that is scarce is one that is

in limited supply

Which of the following is an example of a business risk that cannot be covered by insurance:

increase in interest rates

Which activities are likely to increase a firm's profit?

increasing sales and decreasing expenses

If a consumer chooses to go to the movies rather than to a pizza parlor, then the movie theater and the pizza parlor are

indirect competitors

Economic votes" are cast by consumers each time they

make a purchase

A producer is someone who

makes things

What type of economic system is used in the United States?

market

Every society must develop a system for deciding how it will use its resources so that it can

meet people's needs

The most common medium of exchange in modern economic systems is

money

What type of market structure is most commonly found in a private enterprise economy?

monopolistic competition

The state of technology that exists in a society can limit

natural resources and capital goods

Carefully selecting goods or services to sell is an example of handling business risks by __________ the risk.

preventing or controlling

An electronics store charges less for a new television than other electronics stores. The store is engaging in ________ competition.

price

What is the amount of money for which an item sells in the competitive marketplace?

price

A business that advertises a special sale as well as its delivery service is using a combination of ___________ competition.

price and non price

When a business keeps a risk because management is unaware of it, the business is _________ the risk.

retaining

If expenses are greater than income, there's no

reward

People who go into business know that the business may not succeed. This possibility is referred to as business

risk

Which of the following is a pure business risk:

robbery

Following your teacher's guidelines is an example of which ethical principal?

rule of law

Retailing takes place whenever goods are

sold to the ultimate consumer

If one of your coworkers is treating another coworker unfairly, what is the ethical thing to do?

speak up

Gross profit shows business owners the difference between what they've

spent and receive

What motivates businesses to produce efficiently and sell effectively?

the hope of making a profit

Your business is selling more and more large-screen televisions each month. Applying the law of supply and demand, what do you expect to happen to the price and supply of these televisions over the next few months?

the price will increase, and supply will increase

Behaving ethically means doing

the right thing

Why are entrepreneurs important in a private enterprise system?

they encourage the development of new products

When producers use the best combination of resources, consumers are more likely to get goods and services that

they want

Why do marketers classify goods and services?

to aid in marketing planning

The act of reducing or removing risks by shifting the risk factor to another person or business is referred to as __________ risk.

transferring

What are the three basic economic questions?

what products will be produced, how will products be produced, and how will products be allocated

Which of the following is a measurable goal

"i will write 1,000 words by the end of the day"

Determine a product's equilibrium price by examining the following table:

$12.00

What does SMART mean?

Specific Measurable Accepted Realistic Time-Bound

Which of the following is an example of the substitution effect:

The price of laptops went up recently, so Francis decided to buy a tablet instead

After Paul gets away with cheating on his Spanish homework, his friends start cheating on their homework, too. This is an example of which consequence of unethical behavior?

a bad example

An example of a noneconomic want would be the desire for

a friend

In business terms, what is profit?

a monetary reward

In many places, trash pickup is legally controlled by just one company. This is known as

a regulated monopoly

One way in which many businesses demonstrate their social responsibility toward employees is by providing them with

a safe working environment

Management decides to hold its annual meeting in one U.S. city rather than another because of crime in that city. This is an example of __________ the risk.

avoiding

Which of the following is a general benefit profit provides:

better wages

The ultimate goal of all economic activity is

consumption

Profitable businesses often help improve their local communities by

contributing to charitable causes

The amount of money paid for raw materials and products sold is called

cost of goods

One way that competition helps to build a prosperous society is by

creating new jobs

Which of the factors that affect profit are usually able to be controlled?

expenses and pricing

An example of a short-term goal is

finishing the annual report in 2 weeks

A hurricane that destroys a business is an example of a(n) __________ risk.

hazard

The general classifications of business risks are

hazard, operational, strategic, and financial

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

high prices

Which of the following are qualities of monopolies:

high prices and low production

Intergrity means acting with

honesty

Offering higher wages, employee-assistance programs, and benefits are responses to limited

human resources

What do consumers, producers, and resource owners need to have in order to make economic decisions?

information about prices

What do service businesses sell?

intangible activities

Which of the following statements about perfect competition is correct:

it is used as a benchmark to compare real market structures against

One way that competition benefits business is by encouraging the creation of

new companies

Offering high quality, large assortments, and free shipping are examples of

non price competition

Which of the following describes inelastic demand:

not affected by price change

When Maura purchased a new car, she was able to get part of the purchase price back from the car's manufacturer. The car's manufacturer engaged in

offering rebates

The automobile industry, the pharmaceutical industry, and the oil industry are all examples of

oligopolies

The money spent to run a business is called

operating expense

A union strike that stops production at a manufacturing plant is a(n) __________ risk

operational

Businesses can show their social responsibility by contributing to

public intrests

Businesses can protect themselves from the risk associated with lost shipments by

purchasing transportation insurance

The two main divisions of the trade industry are

wholesalers and retailers

Which of the following is a direct benefit to consumers of the effects of competition:

wider product selection