AnswersEconomicsSupply & Demand /Business & Market Structure

Practice Test Answers

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1
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According to the graph, the marginal cost begins to increase when the producer makes

A
five pies.
B
two pies.
C
three pies.
D
four pies.
2
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What most likely will happen if the pie maker bakes a seventh pie?

A
The marginal cost will most likely increase to 2 point 0 0 dollars
B
The marginal revenue will most likely decrease to 8 point 0 0 dollars .
C
The marginal revenue will most likely increase to 12 point 0 0 dollars .
D
The marginal cost will most likely decrease to 1 point 0 0 dollars
3

Which is the best title for this diagram?

A
The Definition of Supply
B
Factors That Affect Supply
C
The Law of Supply
D
Elasticity and Competition
4

If quantity demanded exceeds quantity supplied, what most likely needs to happen to achieve equilibrium?

A
The demand needs to increase.
B
The price needs to decrease.
C
The supply needs to increase.
D
The price needs to increase.
5

Which best explains why a sole proprietor would want a partner?

A
to make it easier to raise funds for expansion.
B
to take advantage of little government oversight.
C
to reduce the number of responsibilities.
D
to move into a more favorable tax bracket.
6

Which best describes the relationship between consumers and producers?

A
They agree on prices.
B
They dislike each other.
C
They interact with each other.
D
They usually ignore each other.
7

Articles of partnership establish

A
what is included in a charter.
B
how profits and losses are divided.
C
what business taxes are paid.
D
how businesses can raise capital.
8

What happens if a country faces a shortage of raw materials?

A
The sellers will invest more capital to compensate for raw materials.
B
The sellers will provide high-quality products at the same price.
C
The sellers will hire more labor to compensate for raw materials.
D
The sellers will halt the production of the product.
9

A monopoly is a market that has

A
many sellers of the same item.
B
a single supplier of a good or service.
C
many sellers of a variety of products.
D
few competing businesses.
10

Successful entrepreneurs contribute to the economy by

A
encouraging free trade.
B
becoming wealthy.
C
expanding markets.
D
creating business strategies.
11

Which scenario is an example of market saturation?

A
The single coffee shop in town usually has a long line of customers and tends to stay busy during business hours.
B
It can be difficult to get reservations at the only upscale Ethiopian restaurant in town, and it is best to call in advance.
C
There are three shoe stores on one block in town, and they have trouble finding customers and making a profit.
D
A second health club will open because the only health club in town is too crowded to accept new customers.
12

Equilibrium occurs when supply and demand coordinate to

A
set prices and production.
B
maintain excess supply.
C
raise prices and production.
D
set excess demand.
13

Which is likely to occur if there is a price increase for a good which exhibits elastic demand?

A
People might buy a more expensive substitute good.
B
People might buy a less expensive substitute good.
C
People might buy a more expensive complementary good.
D
People might buy a less expensive complementary good.
14

What are the factors of production in business?

A
land, labor, and customer base
B
land, labor, and capital
C
land, capital, and interest
D
capital, customer base, and interest
15

Why are utilities, such as electricity and water, examples of natural monopolies?

A
The cost of production restricts competition in the market.
B
There is no need for alternative options.
C
Consumers only trust known companies to provide these essentials.
D
There are limited natural resources to meet demand.
16

What does elasticity measure in economics?

A
how the amount of a good changes when its price goes up or down
B
how the amount of a good changes when the producer uses new materials
C
how the amount of a good changes when the producer hires more employees
D
how the amount of a good changes when its distribution expands

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