Econ Unit 2

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The Latin term ceteris paribus can best be translated as follows:

"Other things being equal."

Top executives in a corporation are typically hired by:

A board of directors.

A good used in the production of other goods or services is known as:

A commodity.

Milk would be an example of the following type of good in relation to breakfast cereal:

A complementary good.

A company that owns a controlling stake in a number of smaller companies, all of which conduct business separately, is known as:

A conglomerate.

A distribution of part of a company's earnings to its shareholders is known as:

A dividend.

A business arrangement where private entrepreneurs purchase the rights to open and run a location of a larger company is known as:

A franchise.

A partnership where profits, liability, and management duties are divided equally among partners is known as:

A general partnership.

A higher price will generally lead to the following:

A higher quantity supplied.

The U.S. Postal Service would be an example of:

A legal monopoly

A monopoly created by a government that prohibits competition by other companies is known as:

A legal monopoly.

A market situation in which there is only one buyer with many sellers of a particular product is known as:

A monopsony.

In the case of a company that controls virtually all of the supply of a critical resource (like aluminum in the case of ALCOA) we would use the following term to describe the situation:

A natural monopoly

In the case of a company that controls virtually all of the supply of a critical resource (like aluminum in the case of ALCOA) we would use the following term to describe the situation:

A natural monopoly.

A good for which demand increases when income increases is known as:

A normal good.

A government license giving the holder exclusive rights to a process, design, or new invention for a designated period of time is known as:

A patent

A company that must accept the prevailing prices in the market, since its own activity is unable to affect the market price is known as:

A price taker

A company that must accept the prevailing prices in the market, since its own activity is unable to affect the market price is known as:

A price taker.

The type of business structure owned and operated by one person is typically known as:

A sole proprietorship.

A share of a company held by an individual or group is known as:

A stock.

All of the following could affect the cost of production of a good EXCEPT for:

An increase in consumer demand.

A good that decreases in demand when consumer income rises is known as:

An inferior good

Generic corn flake cereal would be an example of the following type of good as compared with Kellogg's Frosted Flakes®:

An inferior good

A firm's first sale of stock to investors is called:

An initial public offering.

A situation in which there are many sellers but few buyers is known as:

An oligopsony

A situation in which there are many sellers but few buyers is known as:

An oligopsony.

An above-equilibrium price of gasoline would most likely lead to the following situation:

Buyers will be discouraged from purchasing more gasoline.

A below-equilibrium price of gasoline would most likely lead to the following situation:

Buyers will be encouraged to purchase more gasoline.

Profits from the sale of property, stocks, or bonds are known as:

Capital gains.

All of the following might shift demand for a good EXCEPT for the following:

Changes in the number of suppliers

The law of demand indicates that - all else being equal - as the price of a product increases, the quantity demanded:

Decreases.

Which of the following would NOT be an example of a barrier to market entry for a company trying to enter a given market?

Demand by consumers for a certain good.

If the price of a certain brand of athletic shoes doubles, we should expect:

Demand to fall.

The degree to which supply or demand changes in response to a change in price is known as:

Elasticity.

The term used to describe the only price where quantity demanded is equal to quantity supplied is known as:

Equilibrium.

A partnership agreement should list all of the following EXCEPT:

How the partners buy and sell company stock.

When the price of gasoline rises, oil companies would be encouraged to do all of the following EXCEPT:

Increase investment in alternative forms of energy.

The law of supply indicates that - all else being equal - as the price of a product increases, the quantity of goods or services that suppliers offer will:

Increase.

In the case of a monopoly, the following is true:

One firm produces all of the output in a market

Which of the following would NOT be a condition associated with monopolistic competition?

One producer controls most of the market.

Sole proprietorships are a popular business form due to all of the following EXCEPT:

Owners are exempt from taxes.

A conspiracy between business competitors to set prices to buy or sell goods or services at a certain point is known as:

Price-fixing.

If demand for a new model of Ford vehicles suddenly doubles, we should expect that:

Prices will rise.

Demand curves typically:

Slope downward from left to right.

Supply curves typically:

Slope upward from left to right.

The following term describes when a government pays a firm directly or reduces the firm's taxes if the firm carries out certain actions:

Subsidy

An unexpected event that changes the supply of a product or commodity is known as:

Supply shock

If the price of new Blue-Ray DVDs suddenly falls in half, we should expect that:

Supply will decrease.

If the price of a certain popular designer shirt triples, we should expect that:

Supply will increase.

Which of the following is NOT a condition associated with perfect competition?

The government intervenes to make sure competition is fair and equitable.

The following statement best reflects the legal requirements of a partnership:

The partnership must be registered with the state.

The following statement best reflects the name used by a sole proprietorship:

This can either be the legal name or a trade name


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