AnswersOC27 Economics-2102310-Sem-MeadowsBusiness Structures

Business Structures — Unit test Answers

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

A
The cost of production restricts competition in the market.
B
There are limited natural resources to meet demand.
C
Consumers only trust known companies to provide these essentials.
D
There is no need for alternative options.
2
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The chart shows the marginal cost and marginal revenue of producing apple pies.What most likely will happen if the pie maker bakes a seventh pie?

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A
The marginal cost will most likely decrease to $1.00
B
The marginal cost will most likely increase to $2.00
C
The marginal revenue will most likely decrease to $8.00.
D
The marginal revenue will most likely increase to $12.00.
3

The chart shows the marginal cost and marginal revenue of producing apple pies. What most likely will happen if the pie maker continues to make additional pies?

Question illustration
A
The marginal costs will continue to rise, increasing the total cost, while the marginal revenue remains the same, decreasing the profit earned for each pie.
B
The marginal costs will continue to fall, decreasing the total cost, while the marginal revenue remains the same, increasing the profit earned for each pie.
C
The marginal costs will continue to rise, increasing the total cost, while the marginal revenue remains the same, increasing the profit earned for each pie.
D
The marginal costs will continue to fall, decreasing the total cost, while the marginal revenue remains the same, decreasing the profit earned for each pie.
4

Successful entrepreneurs contribute to the economy by

A
becoming wealthy.
B
expanding markets.
C
encouraging free trade.
D
creating business strategies.
5

The highest amount a landlord can charge for rent is an example of

A
an incentive.
B
a price floor.
C
a price ceiling.
D
an elastic service.
6

A clothing store has ordered a new supply of jeans for the fall season and wants to sell off the remaining items from the previous spring. What action would the store owner most likely take?

A
The store owner would most likely raise the price of the spring jeans to encourage producers.
B
The store owner would most likely lower the price of the spring jeans to encourage producers.
C
The store owner would most likely raise the price of the spring jeans to encourage consumers.
D
The store owner would most likely lower the price of the spring jeans to encourage consumers.
7

In which way do producers try to differentiate themselves in monopolistic competition?

A
price
B
advertising
C
product features
D
image
8

Why is pure competition considered an unsustainable system?

A
Price differentiation is often too minimal to matter.
B
Few barriers exist to entry, meaning that the market inevitably floods.
C
Consumers cannot distinguish between products.
D
Producers cannot make a profit if they keep dropping their prices.
9

A monopoly is a market that has

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

What does elasticity measure in economics?

A
how the amount of a good changes when the producer hires more employees
B
how the amount of a good changes when the producer uses new materials
C
how the amount of a good changes when its price goes up or down
D
how the amount of a good changes when its distribution expands
11

Motherboards, Inc., manufactures computer parts. The company’s total revenue is

A
the money the company earns after paying all of its production costs.
B
the total wages the company pays workers in its factories and stores.
C
the amount of money the company earns from selling an individual part.
D
the amount the company receives from the sale of all of its computer parts.
12

Which statements correctly explain price floors and price ceilings? Choose four answers.Ineffective price floors tend to be too high.Ineffective price ceilings tend to be too low.Price floors help producers by raising prices.Price ceilings help consumers by lowering prices.Effective price floors are set above equilibrium.Effective price ceilings are set below equilibrium.

A
Ineffective price floors tend to be too high.
B
Ineffective price ceilings tend to be too low.
C
Price floors help producers by raising prices.
D
Price ceilings help consumers by lowering prices.
E
Effective price floors are set above equilibrium.
F
Effective price ceilings are set below equilibrium.
13

A business owner would most likely create a cooperative instead of buying a franchise because

A
cooperatives give majority owners the most control, while franchises make decisions with a parent company.
B
cooperatives make it easy to accumulate supplies, while franchises come with supplier relationships already in place.
C
cooperatives are well financed by members, while franchises must raise large sums of money to launch a business.
D
cooperatives allow all owners to share profits, while franchises are required to share profits with a parent company.

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