AnswersPersonal Finance - EL3403Case Study: Starting a Business

Case Study: Starting a Business — Unit test Answers

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Goods that are considered to be needs tend to be

A
elastic when the price changes.
B
inelastic when the price changes.
C
elastic when the supply changes.
D
inelastic when the supply changes.
22
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What must an entrepreneur assume when starting a business?

A
that the correct location guarantees success
B
that every product has a customer who wants it
C
that clever market strategies may still fail to sell a product
D
that raising funds is the most difficult step in starting a business
23

An entrepreneur’s first business fails, but their second attempt at the business is succeeding. You can assume that

A
they learned from their mistakes.
B
they are willing to take fewer risks.
C
their products or services were unneeded.
D
they were unwilling to take financial responsibility.
24

Which is an example of a negative incentive for producers?

A
a chance to make more money
B
a special sale at a department store
C
a coupon clipped from a newspaper
D
a sharp increase in production costs
25

The graph shows a production possibilities curve for Sabrina’s Soccer. At which point on the graph are resources not used efficiently?

Question illustration
A
point A
B
point F
C
point X
D
point Y
26

[BLANK]

A
total revenue
B
marginal revenue
C
marginal cost
D
total units produced
27

Read the graph.

Question illustration
A
Fewer new businesses were started in 2010 than in other years.
B
The opening of new businesses peaked between 2007 and 2008.
C
More new businesses were started in 2006 than in 2005.
D
The number of new businesses remained constant between 2006 and 2009.
28

According to the law of supply, price and quantity move

A
along a track in the same direction.
B
along a track in opposite directions.
C
from different points toward one another.
D
from the same point away from one another.
29

[BLANK]

A
goal
B
problem
C
loss
30

The government has set a price floor on bread. Manufacturers cannot sell loaves for less than $5.00, which is a dollar above the market price. What will most likely result from this price control?

A
The quantity demanded for bread will decrease, and the quantity supplied will increase.
B
The quantity demanded and quantity supplied for bread will increase.
C
The quantity demanded for bread will increase,and the quantity supplied will decrease.
D
The quantity demanded and quantity supplied for bread will decrease.
31

A person studying economics chooses to buy an economic textbook for their class, even though it means they cannot afford to buy a video game they want. This shows an understanding of

A
goods.
B
services.
C
production.
D
consequences and tradeoffs.
32

How can producers make the most profit? Check all that apply.They can work to increase their marginal cost.They can work to decrease their marginal cost.They can raise prices to increase marginal revenue.They can lower prices to decrease marginal revenue.They can keep marginal costs below marginal revenues.They can keep marginal revenues below marginal costs.

A
They can work to increase their marginal cost.
B
They can work to decrease their marginal cost.
C
They can raise prices to increase marginal revenue.
D
They can lower prices to decrease marginal revenue.
E
They can keep marginal costs below marginal revenues.
F
They can keep marginal revenues below marginal costs.
33

The graph shows a production possibilities curve for Sabrina’s Soccer. At which two points will Sabrina’s Soccer produce the most equal amounts of soccer balls and soccer nets?

Question illustration
A
points A and B
B
points C and D
C
points E and F
D
points X and Y
34

Read the graph.

Question illustration
A
A company selling telephones most likely has only a 40 percent chance of surviving for at least four years.
B
A company offering physical therapy most likely has only an 80 percent chance of surviving for at least two years.
C
A company offering cleaning services most likely has only a 50 percent chance of surviving for at least eight years.
D
A company selling diabetes supplies has only a 60 percent chance of surviving for at least three years.
35

What is the fundamental problem producers and consumers face?

A
services
B
scarcity
C
resources
D
inadequacy
36

According to the law of supply, price and quantity move

A
along a track in the same direction.
B
along a track in opposite directions.
C
from different points toward one another.
D
from the same point away from one another.
37

The chart compares the price of graphic T-shirts to the quantity demanded.

Question illustration
A
interest in a product and the price a consumer pays.
B
interest in a product and the price a producer pays.
C
amount of a product and the price a consumer pays.
D
amount of a product and the price a producer pays.
38

Which factor most directly affects a furniture company's supply?

A
the growing number of furniture buyers in the market
B
the availability of raw materials and natural resources
C
a change in the price of rugs and other complementary goods
D
an increased interest in antique furniture over modern furniture
39

What must an entrepreneur assume when starting a business?

A
that the correct location guarantees success
B
that every product has a customer who wants it
C
that clever market strategies may still fail to sell a product
D
that raising funds is the most difficult step in starting a business
40

In a communist command economy, workers are employed by

A
the agencies.
B
the consumers.
C
the producers.
D
the state.

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