ECON 101: Principles of Microeconomics Final Exam Practice
Company Z produces 10,000 units in a year. It has fixed costs of $50,000, direct labor costs of $50,000, and direct material costs of $100,000. What is the unit cost for Company Z's product?
$20/unit
Alpha Company Ltd is looking to lease a photocopier. The monthly lease for the photocopier is $65 and an additional charge of $0.05 per copy. Calculate the lease cost of the photocopier during the month of July if the expected number of copies is 50,000.
$2565
PEN Company Ltd is a company that produces pens. The unit cost of a pen in January was $1 if 50,000 units are produced, with direct labor and direct material costs are $15,000 and $16,000 respectively. Calculate the unit cost of a pen in February with an order totaling 4000 units if direct labor costs and direct material costs are $6,000 and $4,000 respectively.
$7.25
An IT company has total costs equal to $350,000 for producing 500 laptops. They sell the laptops for $900 each. What is the average cost of a laptop?
$700
What should x be substituted with in order to have the proper formula for cross price elasticity of demand?
% change in QUANTITY demanded for product A / % change in price of product B
What is the simple mathematical equation for calculating a product's elasticity?
% change in quantity demanded or supplied / % change in the price
How is price elasticity of demand measured?
% change in quantity demanded/% change in price
If the price of printers increased by 10% and the quantity demanded of printer paper fell by 2%, what is the cross elasticity of demand equal and what does it tell us?
-0.2; the products are complements.
If the cost-pool for labor has a total of $125,000 and the driver for that pool is 45,000 labor-hours, what is the activity-based costing rate for labor?
2.78
If a 10% change in price leads to a 30% change in the quantity demanded, then what is the elasticity?
3
What percentage of the United States economy is supported by consumer spending?
70%
When demand for a product goes from 100 to 200 and income goes up from $40,000 to $45,000 what is the income elasticity of demand?
8.0
What is the difference between an S-corporation and a C-corporation?
A C-corporation is subject to double income taxation, while an S-corporation is not.
Identify which of the following is the MOST likely target of moral suasion:
A businessman from New York.
Which of the following BEST defines an acquisition?
A company obtains a controlling interest in another company.
Which of the following offers an explanation of a wholly owned subsidiary?
A company that is completely owned by another company.
Which one of the following is considered a disadvantage of a corporation?
A corporation is more complex and expensive to run.
What is a short-run cost?
A cost incurred while satisfying current contracts.
What is a long-run cost?
A cost pertaining to production following the fulfillment of current contracts.
Which of the following is an example of a share?
A financial security which guarantees that the person holding it will have a share of the ownership of a company.
Identify which of the following is an example of a cartel:
A group of companies from the oil sector working together to have a monopoly on determining the price of oil and limiting supply.
What is a cartel?
A group that agrees to limit supply to increase prices.
Which of the following best describes a franchise?
A licensing arrangement between a company and another party licensing the use of the company name, products and processes
What is the Fallacy of Composition?
A part of something dictates how the whole will act
In microeconomics, which of the following is considered a consumer?
A person, group or organization that is the final user of a product or service.
Which of these BEST defined an oligopoly?
A situation in which a particular market is controlled by a small group of firms, such as the gasoline industry
How is a private limited company different from a sole proprietorship?
A sole proprietorship is owned by a single individual who is personally responsible for the company's business debts and essential to its continued existence, while a private limited company is an independent legal entity.
Which of the following is an ethereal or intangible added utility to a consumer?
A straightforward rational decision would not value the ethereal atmosphere of the coffee shop, from the smell of espresso to the smile of the cute barista. Instead, a straight rational approach would favor high-octane coffee from a gas station. But, for your consumer, those are experiences that their own rationality justifies.
Which of the following is an example of Post Hoc Ergo Propter Hoc?
A teacher claiming credit for the school's athletic performance since his arrival.
Bob is trying to start ABC Sandwich Shop. The only problem is that Bob is having a really hard time finding a deli meat provider that would give him the supplies necessary to make his sandwiches. What kind of barrier to entry is this?
Access to Suppliers and Distribution Channels
Sarah owns a factory that produces tin cans. A company puts in an order for twice as many cans as usual, but only for one month. Why might Sarah turn down this order?
Accommodating this order might raise her marginal costs beyond the point where the deal is profitable.
Which of the following is NOT an inelastic demand for a product?
An elasticity of 1.5.
What is a util?
An imaginary measure of utility.
If a shift factor of demand causes a shift of the demand curve to the right, what will most likely happen?
An increase in price and new equilibrium point.
What does someone have to file to form a limited liability company?
Articles of organization
Why do diamonds cost so much?
Artificial shortage induced by producers
What does the law of demand suggest?
As prices decrease, demand increases.
How is variable cost linked to the number of products a company produces?
As the number of products increases, the variable costs increase.
A binding price ceiling line is _____ the market equilibrium point.
BELOW
Why is knowing the average cost beneficial to the manager?
Because it will assist them in pricing the product.
Why does the variable cost curve rise quickly at first?
Because the initial start-up costs in business are high. Going from zero to functioning factory will take upgrades.
Why is it a good idea to invest in land and natural resources?
Because they are not likely to ever lose value.
Which of the following explains why shareholders of C-corporations are subject to double taxation?
Because they have to pay their regular income tax and a tax for dividends.
Bob goes to Susie's General Store which is a Limited Liability Company. While there, something falls off the shelf and hits Bob on the head. Bob wants to pursue legal action. What are Bob's legal options?
Bob can sue the General Store for medical bills and damages.
What is the best explanation of pass-through taxation?
Both income and losses pass through the entity and are reported on the tax returns of the individual owners
How do process costing systems allocate expenses to products?
By adding total costs at each stage of the manufacturing process then dividing these costs by total number of units produced.
Why does internet piracy cause the supply curve to shift to the left?
By engaging in internet piracy, individuals effectively gain the good for a price of zero. This has a huge impact on the supply curve, effectively causing it to shift to the left dramatically. This is why industry groups so heavily prosecute repeat offenders. They are destroying the demand for the goods, causing producers to ask 'what's the point of producing?'
How could someone use two different types of coffee to illustrate the concept of marginal rate of substitution?
By showing how likely a group of consumers are to accept the other type when it is offered in place of their requested type
How does a company benefit from forming or purchasing a wholly owned subsidiary?
By using the subsidiary as a means of absorbing risk in a business transaction
How can utility change?
Circumstances can cause the utility gained by a specific action to change.
Which of the following BEST defines explicit costs?
Clear and obvious cash outflows from a business
Cleo is always attentive to his clients' marginal rate of substitution. Which statement is most likely to be FALSE regarding Cleo's business?
Cleo's clients may be unsatisfied.
Which of the following is an example where IT systems encouraged increased productivity?
Companies receive feedback much faster, allowing them more time to react and upgrade their products. Companies have many of their processes automated, allowing for increased productivity. Companies have almost instant access to the most critical information needed to operate at the highest efficiency. !!!!All of the answers are correct.
According to microeconomics, how are consumers MOST likely to behave in the marketplace?
Consumers want to achieve the most happiness for the lowest cost.
Ethan oversees a large company that produces a significant amount of both goods and services as well as economic profit. Which system of allocation is relevant to Ethan's situation?
Contributive standard
How does advertising impact the supply and demand curve?
Demand curve shifts to the right
Which of the following intersect at market equilibrium?
Demand curve; supply curve
If a new clothing brand becomes more popular because some recent movie stars endorsed the clothing line, how will it affect the market equilibrium for the clothing brand?
Demand increase, causing a new higher equilibrium price.
For an inelastic good, what happens to demand as price increases?
Demand stays almost exactly the same
What happens when goods have derived demand?
Derived demand exists when demand for a good is determined by the market conditions of another good.
Janet is a CEO of a large multinational company. This company understands the risk of business in the 21st century and doesn't invest all of its money into one particular field, but rather invests into a whole range of areas from tourism, electronics, the media, construction and promotion. What is the name of such an approach?
Diversification
How do governments plan for greater consumer demand?
Economic growth means that there are more opportunities for people to have greater resources, thus limiting the effects of scarcity. However, it also allows the government to predict future consumer interests, and help make sure that infrastructure is in place to handle the effects of that new consumption, from roads and electrical lines to legal regulations and increased pollution.
Which of the following BEST explains sustainable economic growth?
Economic growth that can be sustained with minimally adverse effects on the environment
Economy A has a comparative advantage over Economy B. What is the reason for this?
Economy A has a lower opportunity cost.
Which of the following would likely cause an increase in demand for a good?
Expectations that the price of the good may increase dramatically in the future.
Identify the hindrance to buying a franchise.
Expensive licensing fees and start-up costs
Accounting software for a bakery is:
FIXED cost
Identify a fixed cost and a variable cost that are involved in the operation of an automobile.
Fixed cost: insurance; variable cost: gas
Why is gasoline an inelastic product?
Gasoline is inelastic because people need gasoline no matter what. People need to get around and even if the price goes up, people will still find a way to buy it. And the demand for gasoline usually is the same regardless of the price.
Which of the following is the best explanation of the main difference or differences between a limited partner and a general partner?
General partners manage and are subject to personal liability, while limited partners do not manage and have limited liability.
Which one of the following do LPs, LLPS, and LLLPs have in common but is not a characteristic of a general partnership?
General partnerships do not typically have to register with the state's secretary of state, but the other types of partnerships do have to register.
A company using the Pac-Man defense to combat a takeover will MOST likely do which of the following?
Go on the offensive and take over the company that is attempting the takeover
One disadvantage of a private limited company is that they are limited to only 50 shareholders. Why is this seen as a disadvantage?
Growth may be limited, because the number of shareholders is restricted.
Who used utility to transform car manufacturing?
HENRY FORD
Janet is looking over her expenditures over the last year and trying to decide which of them should be considered sunk costs. Which one listed below BEST fits into this category?
Her purchases of two online book downloads that she ended up not enjoying and didn't finish
How does inflation make an economy inefficient?
High inflation can quickly destroy an economy.
Which of the following will most likely occur as a result of an increase in labor productivity?
Higher economic output and lower inflation.
Which of the following does the cross price elasticity of demand between two goods NOT tell us?
How an income change will influence demand for each product.
Tom works as a health insurance salesman. Which of the following best measures his productivity?
How many people he gets to sign up for health insurance
When would a price go below 0?
If the consumer pays the producer to stop.
If you were going to sum up the main lesson of product curves, how would you best explain it?
If you put too many inputs into a business, it has the potential to hinder production
When is it rational to throw money in the air with abandon?
If, for the owner of that money, that is the best use they can think of to bring them utility.
Which of the following describes the income tax treatment for a sole proprietorship?
Income and losses are reported on the owner's personal income tax return.
Which of the following is an example of causation?
Increased consumption of hot chocolate during cold weather
Which of the following is NOT a key factor that determines the elasticity of supply in a product?
Intense diversification of consumer base
Why is knowing total cost helpful to a manager?
It can help them determine the cost of expansion.
Which of the following is true about a limited liability company?
It has characteristics of both a corporation and a partnership.
Which of the following is a characteristic of the income elasticity of demand?
It is between 0 and 1 for necessities
What is the primary reason a business would decide to become a corporation over any other form of organization?
It is ideal for those who want a business that is considered a separate entity from its owners.
Which of the following BEST describes a merger?
It is when the acquiring company absorbs the target company after acquisition.
Susan is analyzing a demand curve for goods. She observes that the curve shifts to the right and increases to show a direct relationship. What can Susan conclude about this curve?
It represents a normal good.
How is labor productivity, measured as output per worker, affected by economic drivers?
It rises with increases in technology.
Susie Smith is a celebrity who is famous for her fashion advice. She recently wore a scarf and spoke publicly about how much she liked it. What is likely to happen to the supply of that scarf and why?
It will increase, because as the demand for a product increases, the supply increases.
How would we describe a supply surplus in terms of supply and demand?
It's when supply exceeds demand.
If Jim can make 40 chocolates or 2 cakes in one hour, and Kate can make 20 chocolates or 2 cakes in one hour, who has the comparative advantage in cake-making and why?
Kate, because making one cake costs 10 chocolates.
Why is the Economic Man a flawed model of human behavior?
LACKS humanity
Mary and Joanne would like to start their own jewelry business. They do not want to file a bunch of papers, but also do not want to be personally liable for debts incurred by the company. Which form of ownership should they pursue?
LLC
The word comfortable meaning different things to different people is an example of _____.
LOADED TERMINOLOGY
What can be a disadvantage associated with the use of a franchise?
Lack of flexible decision-making for franchisee
what law has arrow upwards to right
Law of supply
Which of the following is NOT a subject in the study in macroeconomics?
Local real estate
Which of the following is a substitute good for butter?
MARGARINE
How does marginal cost differ from total cost?
Marginal cost is the cost of producing just one more unit of a good, while total cost is the sum of all costs of production.
James works for a large IT company. They are currently under audit and are rethinking their business processes. They are interested in what the price would be to create just one more unit of their best-selling product. What is this called?
Marginal price
What does a company like McDonald's want to ensure in each of its franchises?
McDonald's wants its patrons to have a similar experience in every location.
What is the primary difference between microeconomics and macroeconomics?
Microeconomics looks at scarcity for companies, while macroeconomics looks at it for entire economies.
_____ is the study of business and consumers, while _____ is the study of the economy as a whole.
Microeconomics; macroeconomics
What is a sunk cost?
Money that has been lost and cannot be regained.
What are subsidies?
Money that's paid directly to producers to encourage the production of certain goods.
Are all goods necessarily related and subject to an indifference curve?
No, it is unlikely that the choice of toilet brush influences the choice of car.
As a consumer's income increases, he or she will purchase more _____, such as _____.
Normal goods are those goods that have a direct relationship with income meaning as a person's income increase, so does the number of normal goods purchased. Normal goods include things like wine, roses, and technology equipment.
Tyler is the sole owner and stockholder of the corporation, Tyler's Tires. Two years ago, Tyler's Tires hired Anna as the CEO. If Tyler dies, what happens to Tyler's Tires?
Nothing, it continues to run under the direction of the CEO.
What happens to the short-run production curve when a typical coffee shop has 20 employees on one shift, and why does it happen?
Output is near 0, because there are too many employees working at once, which hinders production.
Describe what happens to the short-run production curve of a coffee shop that hires its second employee.
Output rises dramatically
What is an example of a direct materials cost?
Paint ingredients
Which one of the following is the partnership document that governs the rights and responsibilities of the partners?
Partnership agreement
Jennifer really enjoys watching hockey, but she doesn't have very much money. Which of the following will most likely maximize her utility?
Paying $20 for decent seats at a hockey game.
A board of directors of a large multinational company is assessing the strategic opportunities of the company. Which of the following is it MOST likely they will determine?
Policies and vision
Which of the following is NOT a good definition or example of short-run production?
Production that happens next quarter
A decrease in average cost by 50% will result in an increase in profits of 50%, assuming that the decreased cost also increases efficiency. Why is this statement FALSE?
Profits will increase by more than 50 percent.
Which of the following is NOT used in enforcing Laws?
Regulation
Which of the following represents the basic concept of economics?
Scarcity exists and utility is a reliable measure of how useful something is to someone.
Jill owns a small coffee shop as a sole proprietor. Some of her creditors are considering suing her coffee shop for not paying them on time. Why is Jill liable in such a case and to what extent is she liable?
She is completely liable and the trial would likely force her to pay the creditors regardless of the coffee shop's profit.
When demand for a product is greater than supply, a _____ exists and there is _____ pressure on prices.
Shortage; upward
Why are product shortages normally a bad thing for economic markets?
Shortages are normally a bad thing for market forces, because they mean that the economy is not working at full efficiency.
Jennifer is the CEO of a company whose firm receives direct financial payments and loans, with very low interest rates, from the government. All of this is to make sure that their products are competitive with imported goods. What is this an example of?
Subsidies
Which of the following is an example of an industry that has only a few companies in the U.S. which have a strong grasp over the market?
The airlines Oil companies Mobile phone providers !!!All of the answers are correct.
Which of the following is NOT a standard developed by economists for resource allocation?
The allocative standard
Which of the following best defines deadweight loss?
The amount of money that an economy lost through price ceilings and price floors.
What does the rate of transformation measure?
The amount of two goods you can get for a specific amount of money
Which of the following is a variable cost?
The amount paid for steel used in making a car.
What is average cost?
The average cost of resources per unit produced.
What happens if a sole proprietorship takes on a second owner?
The business ceases to be a sole proprietorship.
How are taxes handled in a partnership form of business ownership?
The business passes its profits and losses to the owners, and they claim the profits and losses on their personal tax return.
Why would a company choose a process costing system over a job costing system?
The company produces products that are identical.
Yoho Motors files for bankruptcy. The company's creditors then seek payment from the corporation and the shareholders. Why will the creditors NOT be able to recover their debts from the shareholders?
The corporation offers limited liability to its shareholders.
Identify which of the following is an example of short-run costs:
The cost of completing a current contract they have with the local government.
Which of the following defines benefits without expenditures?
The cost of resources that are not being charged directly to the company
Human capital refers to which of the following?
The education and experience of the labor force.
Let's say that the supply of high quality agave syrup goes up by around 20%, while, thanks to an incredible and ingenious marketing campaign, the demand for this high quality agave syrup has raised the price 40%. What is the elasticity of supply and is this elastic or inelastic?
The elasticity of supply is 0.5, which means it is inelastic
According to the law of diminishing marginal returns, at which point is the price for a good the highest?
The first unit consumed.
What do indifference curves measure?
The impact of the demand of good X on the demand for good Y.
Which of the following defines economic resources?
The inputs we use to produce goods and services.
Which of the following is a barrier to entry?
The insurance industry has special licensing requirements for those selling insurance.
John owns a startup which works in online marketing. He has always cared about offering services at acceptable prices to his customers. Thomas is one of his customers who always felt that John's firm offered the right amount of time and quality for the price he had to pay. What concept BEST reflects the process which led to the creation of this price?
The invisible hand
At which point should a producer stop producing goods, according to the law of diminishing marginal returns?
The last unit that the consumer pays for that is sold above the manufacture price.
Tom is a successful CEO of a large manufacturing company. He is thinking about the concept which he always applies to his business which states that while an amount of resources may be beneficial for output short-term, it may have a negative impact in the long-term. What economic concept is he thinking about?
The law of diminishing returns
As Rosa considers where to build her new bakery, she also factors in the number of other bake shops in the area. If she builds in an area where she is one of many bakeries, she will be forced to charge lower prices in order to compete with the other bakeries already in the neighborhood. This is an example of which economic theory?
The law of supply and demand
Tommy is a small business producer who badly needs steel to produce more of his signature products. If Tommy lives in a country that has an efficient market, which of the following should be the response of the market?
The market should help with the allocation of steel or any resource at the lowest cost possible.
Why do economists designing new models to test economic ideas often fall victim to bias?
The model is specified based on what the economist hopes to find.
Cross price elasticity of demand is equal to the percentage change in quantity demanded for Product A, divided by:
The percentage change in price of product B.
What is market equilibrium?
The point at which supply meets demand.
How do the points inside the rate of transformation curve differ from those outside the curve?
The points inside the curve indicate that one has saved money.
How does price elasticity of demand and cross price elasticity of demand differ?
The price elasticity of demand measures how responsive the quantity demanded for a good is in response to a change in the good's own price, while the cross price elasticity of demand measures how responsive the quantity demanded for a good is in response to a change in the price of another good.
If the supply curve shifts to the left, what most likely happened?
The price of input costs increased.
How is the marginal rate of substitution best defined?
The rate at which a person will replace one good with another.
What is the definition of utility?
The real value of something in its usefulness, not anything implicit.
Which of these does the cost curve demonstrate?
The relationship between quantity produced and cost of resources
What does a product curve demonstrate?
The relationship between resources and production
What rights does a parent company have?
The right to appoint the subsidiary's board of directors.
What does income elasticity of demand show us?
The sensitivity of changes in income on quantity demanded for products and services
What is economics?
The study of a society's allocation of resources
Which of these is the BEST definition of microeconomics?
The study of how individuals and businesses behave and make decisions based on limited resources
How is a supply and demand graph affected by a supply surplus?
The supply curve shifts to the right for surpluses.
How does innovation impact the supply and demand curve?
The supply curve shifts to the right.
Over the course of a summer, New Hampshire experiences a shortage of potatoes. How will the supply and demand graph for potatoes be affected in this state?
The supply curve will move to the left.
What is total cost?
The total cost of resources for a given good's production.
What is the unit cost?
The total cost to produce a product divided by the number of units produced.
If the cross price elasticity between apples and oranges is 2, which is correct?
The two goods are substitutes, and a price increase in one good will cause an increase in the quantity demanded of the other.
How does pure research differ from most research approaches?
There is no expectation of a short-term payoff.
Why are surpluses and shortages bad?
They are inefficient
How is knowledge of the theory of production useful to a company?
They can determine how much of which resources they need to acquire.
Which of the following is FALSE regarding financial resources?
They have a value of their own, rather than deriving their value from social convention.
What do the points to the right of the rate of transformation curve tell us about a budget?
They indicate that a consumer cannot afford a purchase.
Why do businesses care about microeconomic assumptions about consumer behavior?
This is important for businesses to understand when pricing their products in competitive markets.
Why might a company want to establish a wholly owned foreign subsidiary?
To take advantage of favorable foreign tax treatments.
The law of diminishing marginal returns is best summed up by which of the following statements?
Too much of a good thing is bad.
X=VC+ FC What is the full name of the curve labeled X which helps producers make production decisions?
Total cost curve
What is the difference between traditional costing and activity-based costing systems?
Traditional costing uses a single rate to allocate manufacturing overhead to different products, whereas activity-based costing uses cost pools to apply individual rates.
What is the most significant risk factor in a sole proprietorship?
Unlimited liability, even for employee actions
Which of the following are NOT common types of barrier to entry in economics?
Unskilled jobs and free enterprise
Why would a company ever consider utility if it meant a significant up front cost or short-term loss of profits?
Utility may improve efficiency in your company in the long-term which will increase the potential profit ceiling compared to what it was in a lower efficiency process.
Which of these is the total cost?
Variable cost plus fixed cost
Bondo Computers builds and sells laptops. The company also has several wholly owned subsidiaries that manufacture graphics cards, computer chips and hard drives. What is this an example of?
Vertical integration
Which of the following is an example of research and development?
When the government is focused on discovering new ways to conquer issues resulting from global warming. When a business is trying to find what new innovative methods or technological advances it may use to enhance productivity. When an academic institution conducts a project to rethink how it may benefit the society as a whole. !!!!!!!All of the answers are correct.
When is a good considered to have an elastic supply?
When the quantity of a product supplied goes up in percentage and is greater than the price percentage increase, it means our supply elasticity was good.
Identify which of the following is an example where piercing of the corporate veil will MOST likely occur:
When the shareholders treat the company as their personal property, rather than a separate legal entity.
When will natural market forces place upward pressure on prices and the quantity supplied?
When there is excess demand
XYZ Bicycles is trying to make production decisions for the future. Currently, XYZ is able to sell the next bicycle they will produce for more than it costs them to make. Should XYZ increase production, and why?
Yes, they should increase production, because the sales price is greater than the marginal cost of production for the bicycle.
How does the idea of utility influence producers in the products they create for consumers?
You also assume that your consumers will use utility in making their decisions. For the greater economy, we assume that people will pay for things that give them the most use.
John has bought a financial security from a large IT company. This company doesn't entitle him to a share in the ownership. The benefit of the financial security is that he receives an interest rate every year, which has the same amount during the life of this financial security. Which of the following is described in the above scenario?
a bond
What is a cost pool?
a grouping of individual costs associated with the manufacture of goods
Wayne exports expensive jewelry and is having difficulties with the interpretation of some documents. He has found out that he needs permission to even access the market he is interested in because of the regulation of that country. What is this called?
a license
Which of the following businesses represents a sole proprietorship?
a man who owns and operates a lawn mower repair business by himself
Thomson Pharmaceuticals is constantly lowering prices, hoping to push their competitors out of the market. In the short-term, this is great for consumers as prices go down, but this practice is destroying the competitiveness of smaller producers. What is this practice called?
a price war
Long-run production is best defined as which of the following?
a production strategy focusing on business planning beyond current contracts
A binding price floor is _____ the market equilibrium point.
above
The term for being able to make the greatest amount of a good in a given time is:
absolute advantage
The Agrarian phase of technology consisted of _____ tasks focused on mechanization.
agricultural
How are indifference curves useful?
all
How do producers try to better understand their consumers?
all
What types of manufacturing companies would typically use a process costing system?
all
Why is it a good idea to create a partnership agreement?
all
What is manufacturing overhead?
all expenses incurred during the manufacture of a product that cannot be directly allocated to that product
Carlos is examining the processes Haystraw Farms uses to generate crops. He notices that the money the farm is spending and the use of labor are not maximized to produce as much crop as possible. Carlos has found a problem in the farm's _____.
allocative efficiency
How are sole proprietorships taxed?
as individuals
If a company is trying to determine a fair price for its goods, which of the following matters the most?
average cost
Alisa owns Alright Business Services. It is a corporation, but Alisa does not use the word 'Incorporated' or 'Inc.' anywhere on her correspondence. Alisa is in charge of paying the bills for the business and sometimes writes rent checks out of her personal account. The business is not doing well, and is several months behind on making rent payments. Her landlord sues Alright Business Services and Alisa for the rent. How will the landlord recover the unpaid rent?
both the biz and alisa
What do you call the documentation that governs the corporation's activities?
bylaws
All of the following can cause the supply curve to shift, EXCEPT:
changes in disposable income
What action would negate a shareholder's limited liability protection?
committing fraud
Price ceilings largely benefit:
consumers
When a firm is determining whether or not to relocate a factory, which of the following is of the MOST use?
cost per unity produced
What is the term for economic output lost due to a price floor or ceiling?
deadweight loss
Which is an UNLIKELY effect of a producer only taking into consideration their own marginal rate of substitution and not that of their clients?
decrease in stock
If the elasticity calculation result is greater than 1.0, then _____.
demand or supply is elastic
What rule says that too much of a good thing is bad when it comes to increasing outputs?
diminishing returns
Which of the following belongs to the nature cost classification?
direct costs vs. indirect costs
Which of the following is another way of describing why it's best to not get upset over a sunk cost?
don't cry over spilt milk
A corporation is taxed on its profits, and the owners are taxed on the income they receive from the corporation. What does this refer to?
double taxation
Which of the following BEST describes the intersection between supply and demand?
equilibrium
What type of document has to be filed nine months after the financial year ends?
financial statement
In economics, scarcity means that:
finite amount of resources
What type of cost is the unchanging base cost that is paid every month when renting a machine?
fixed
Which of these is a straight horizontal line on a total cost curve?
fixed cost
A state government offers tax breaks to companies to build factories in their state. If a company takes up this offer and builds a new factory in this state, what will they be reducing?
fixed costs
Radio Shack is an example of a company doing which of the following?
focusing exclusively on current business contracts, or short-run production
Which company attempted to reduce their fixed costs at the Rouge River plant and ended up with massive marginal costs?
ford
What type of partnership offers no protection from personal liability for the partners?
general partnership
All of the following are normal goods EXCEPT:
generic drug
All of these are common topics studied in microeconomics, EXCEPT:
globalization
Elasticity of demand is said to be elastic when elasticity is:
greater than 1
Which of the following is a complementary good for a bicycle?
helmet
Which of these probably has inversely proportional derived demand to hamburger patties?
hot dogs
Which of these is a variable cost?
ice cream cones
_____ - Expenses = Profit
income
If a seller knows that the demand for his good or service is inelastic, then what would they most likely do?
increase price
What is the definition of a good where there is an inverse relationship between changes in income and a demand curve?
inferior
A used laptop is an example of a(n):
inferior good
When quantity demand for product drops when incomes goes up, the product is a(n) _____.
inferior good
Bribery can be _____, but of course is illegal.
innovative
Due to the fact that resources are limited and the increase in technological productivity may have limits, _____ .
it is questionable whether economic growth is unlimited
If Jim can make 40 chocolates in one hour and Kate can make 20 chocolates in that same hour, who has the absolute advantage?
jim
What is a budget constraint?
limit on spending
What type of partnership has a general partner who has full liability and a limited partner whose liability is limited to their investment in the partnership?
limited partnershp
Transitioning from baking to catering is considered which of the following?
long run
What could happen if a franchisee fails to conform to the franchise requirements?
loss of it
Wayne's firm sells home-grown fruit and vegetables online. He should stop increasing production when the price of the product doesn't cover the _____ cost of a product.
marginal
If a company is trying to expand operations, which of the following matters most?
marginal cost
When foreign automakers achieve economies of scale by positioning plants in the United States to avoid tariffs, which kind of costs are they focused on reducing?
marginal cost
Which of the following are economies of scale most dependent on?
marginal cost
_____ is the amount of resources needed to make just one more of a given product.
marginal product
When the pressure for higher prices is exactly matched by a pressure for lower prices, a state of _____ has been reached.
market equilibrium
_____ is when the amount of goods or services sought by buyers is equal to the amount of goods or services produced by sellers.
market equilibrium
What theory is concerned with understanding individual consumer decision making and its impact on businesses?
microeconomics
How does the precision of inputs affect a model?
model is more accurate
Railroads and water services are examples of _____.
natural monopolies
When quantity demand stays the same while income drops, what kind of product is it?
necessity
Odetta is a middle-aged woman who is disabled and on a fixed income. Which standard of allocation is relevant to her situation?
needs standard
Which country did not make use of utility to build its road network in the 1970s?
nigeria
Gary owns a business that manufactures ice cream cones. He uses a machine that produces 24 cones at a time. Paul placed an order of 220 cones, but later asked to add 5 more cones to his order. What expense will be required for Gary to manufacture the additional 5 cones?
no additional cost
How much protection from liability does a sole proprietorship offer?
none, there is no distinction between the owner and the company
In terms of economics, barriers to entry are _____.
obstacles that make it difficult to enter a particular industry or field
Kain is having difficulties understanding implicit cost, as he is fresh out of college and new to his job in the financial sector. He is seeking advice from a more experienced colleague. Which of the following is NOT a word that he may use to describe implicit costs?
obvious
Mark has $15 that he wants to spend on something that entertains him. He was planning to buy a book with this money, but then he decided to watch a new movie with this money. The fact that Mark cannot read the book because he opted for the film is an example of _____.
opportunity cost
A contract to be completed in the next six months would be considered which of the following?
part of short run production
The following items are always present in Julie's handbag: Prescription medicine, toilet paper, chewing gum, reading glasses, and a pen. Which item would you expect to have the highest marginal rate of substitution?
pen
Box A of rice, is the same size and contains all the same ingredients as Box B. The only difference is that Box A is priced thirty cents higher than Box B. These boxes of rice are known as what type of goods in economic terms?
perfect substitutes
Ana works in a restaurant and is considered to be one of the best cooks in the country. She uses a specialized grill to help prepare her meals. The grill is an example of _____ capital.
physical
Economists call the equipment and structures used to produce goods and services:
physical capital
Governments have sought to limit the supply of drugs with all of the following strategies, EXCEPT:
placing caps on production.
What tactic is employed by a target company if it attempts to dilute the value of the shares held by the acquiring company?
poison pill
The following items are always present in Margaret's handbag: Prescription medicine, toothpicks, chewing gum, and a pen. Which item would you expect to have the lowest marginal rate of substitution?
prescription medicine
Which of the following is NOT a determinant of the productivity of a nation?
price controls
Bob is looking for a job, but he lacks the credentials to get a specialized job with a high starting salary. It is likely he will have to start working in an entry level position. Which of the following would benefit Bob in this scenario?
price floor
Which functions does the Economic Man fulfill in an economy?
producer and consumer
If the top 1% of the richest people in the country have to pay a larger percentage of income taxes than a high-school teacher who earns $200,000 each year, this is an example of _____ taxation.
progressive
The Kikkoman company has been successful in business since the 17th Century due to which of the following?
pursuing long-run goals and expanding production to the types of products that would be profitable in the future
A group of people have been invited to fill out a survey regarding their consumer preferences. The economists reviewing the survey answers will be operating under the three basic consumer preference assumptions. Which one of the following is NOT an assumption the economists will make as they review the results?
quality bias
What is the primary focus of innovation?
remaining profitable in the future
All of the following affect marginal cost, EXCEPT _____.
rent on the current factory lease
Which of the following is a fixed cost?
rent paid to a landlord
What is the term for determining how resources are used?
resource allocation.
What is the shape of a cost curve?
right side up bowl
Economists maintain that _____ is central to the actions of individuals, families and companies.
scarcity
Smartphones, the rising importance of the Internet and social media are results of the _____ phase.
semantic
A corporation's owners are known as _____.
shareholders
What is owner liability limited to?
shares
ABC Electronics has a current contract with XYZ Computers to manufacture 100,000 computer chips for them. Which of the following is the best descriptor for this production that ABC is under obligation to fulfill for XYZ?
short run production
Which of these is often acceptable to increase utility?
short term loss
On the supply and demand graph, what is the term for the area above the market equilibrium line?
surplus
What is product costing?
the process of determining business expenses associated with the manufacture of a product
The rate of transformation, as shown on a transformation curve, can basically be thought of as _____.
the rate at which the purchase of one good is transformed into the purchase of another
A sole proprietorship must register with which of the following?
there are no registration requirements
Which factor is most important for expressing total product, but is not needed for working out the average product?
time
If a company is trying to determine whether or not to enter a new sector, which of the following is most important?
total cost
What is the formula to calculate per unit cost in a process costing system?
total expenses incurred in process ÷ total units produced
_____ is the total amount produced per a set of resources.
total product
Whom was Economic Man invented to portray?
typical human
Which of the following is NOT a producer?
unemployed college student
What is the shape of a product curve?
upside down bowl
When deciding to buy a home instead of renting an apartment, you are demonstrating that the extra expense is worth the amount of _____.
utility
Which one of the following pursuits will the Economic Man always pursue as a consumer?
utility
Mixed cost is a combination of _____.
variable and fixed costs
Why are all costs associated with long-run production considered to be variable?
when looking to the future there is no way to predict how costs will change