Answers26-27 Ignite Economics-KY-EconomicsCase Study: Starting a Business

Case Study: Starting a Business — Unit test Answers

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1
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When prices for homes rise, why might construction companies decide to build more homes?

A
to increase employment
B
to make a profit
C
to create a need for more resources
D
to boost name recognition
2
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In the market, actions known as incentives affect

A
producers only.
B
consumers only.
C
consumers or producers.
D
neither consumers nor producers.
3

Products whose demand rises when another product’s price increases are called

A
substitute goods.
B
complementary goods.
C
elastic goods.
D
clearance goods.
4

To generate higher profits, producers must work to

A
increase their total supply.
B
increase their total expenses.
C
decrease their customer base.
D
decrease their production costs.
5

The graph shows a supply curve.Which change is illustrated by the shift taking place on this graph?

Question illustration
A
an increase in demand
B
a decrease in demand
C
an increase in supply
D
a decrease in supply
6

In the United States, which type of industry is often considered part of an oligopoly?

A
electric companies
B
cell phone carriers
C
mail delivery services
D
denim companies
7

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
8

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
9

The chart shows a combined supply and demand schedule.

Question illustration
A
The cost to make a pair of shoes will rise.
B
A scarcity of shoes will result.
C
Profits from selling shoes will increase.
D
Consumers will want to buy fewer pairs of shoes.
10

On a graph, an equilibrium point is where

A
a supply curve and a demand curve meet.
B
a supply curve is higher than a demand curve.
C
the supply and demand curves head up.
D
the supply and demand curves head down.
11

In an oligopolistic market, consumer choice is

A
nonexistent.
B
limited.
C
extensive.
D
infinite.
12

Which explains the connection between the law of demand and excess demand?

A
The law states that decreases in price leads to greater quantity demanded and limited supply, which occurs during excess demand.
B
The law states that increases in price increases leads to greater quantity demanded and limited supply, which occurs during excess demand.
C
The law states that decreases in price leads to greater supply and equilibrium, which occurs during excess demand.
D
The law states that increases in price leads to greater supply and equilibrium, which occurs during excess demand.
13

What can a producer gain by specializing?

A
sales
B
new customers
C
absolute advantage
D
opportunity costs
14

Which best describes how consumers may benefit from specialization?

A
Consumers can only purchase high-quality goods.
B
Consumers have more price options.
C
Consumers receive more sale offers.
D
Consumers find products at lower prices.
15

The graph shows the price of a good compared to the quantity supplied.This graph demonstrates how

Question illustration
A
the amount produced slightly changes with the price.
B
the amount produced greatly changes with the price.
C
the amount consumed slightly changes with the price.
D
the amount consumed greatly changes with the price.
16

The law of supply states that as the price of a good rises, the quantity supplied of that good

A
disappears.
B
decreases.
C
remains the same.
D
increases.
17

In order to compete successfully, a producer must produce goods that are

A
more expensive than those of competitors.
B
of a lesser quality than those of competitors.
C
of a higher quality than those of competitors.
D
created without worrying about the costs of production.
18

The graph shows excess supply.Which explains why the price indicated by p2 on the graph is higher than the equilibrium price?

Question illustration
A
As prices rise, quantity demanded goes up.
B
As prices rise, quantity demanded goes down.
C
As prices rise, quantity demanded stays the same.
D
As prices rise, quantity demanded disappears.
19

Profit equals the total amount of money made minus

A
expenses.
B
prices.
C
revenue.
D
supply.
20

Which describes a way in which consumers most likely benefit from producers’ absolute advantage?

A
Consumers’ opportunity costs decrease.
B
Prices decrease as a result of increased production efficiencies.
C
Producers always use savings to improve products.
D
Consumers can find a given product in more places.

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