Answers EAP-Economics and Personal Finance BUnit Test

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

The cost of production restricts competition in the market.

There are limited natural resources to meet demand.

Consumers only trust known companies to provide these essentials.

There is no need for alternative options.

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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?

The marginal cost will most likely decrease to $1.00

The marginal cost will most likely increase to $2.00

The marginal revenue will most likely decrease to $8.00.

The marginal revenue will most likely increase to $12.00.

Which best describes how specialized producers decrease their opportunity costs?

by reducing production costs

by focusing on target markets

by increasing production of certain items

by limiting the types of goods produced

What is the difference between marginal cost and marginal revenue?

Marginal cost is the money a producer earns from selling one more unit, while marginal revenue is the money a producer pays for making one more unit.

Marginal cost is the money a producer pays for making one more unit, while marginal revenue is the money a producer earns from selling one more unit.

Marginal cost is the money a producer actually earns from selling more units, while marginal revenue is the money a producer might earn from one more unit.

Marginal cost is the money a producer might earn from one more unit sold, while marginal revenue is the money a producer will earn from one more unit.

This table shows the production possibility schedule for several major manufacturing companies in the automobile industry. Manufacturing CompanyTruck Parts Car PartsCompany A10 per hr.20 per hr.Company B10 per hr.25 per hr.Company C15 per hr.15 per hr.Company D20 per hr.25 per hr. Which manufacturing company has the comparative advantage for car parts?

Company A

Company B

Company C

Company D

A monopoly is a market that has

few competing businesses.

many sellers of the same item.

many sellers of a variety of products.

a single supplier of a good or service.

Marginal shows how much money can be made if a producer sells one additional unit of a good.

Answer not available

combinationpricesvalue

combination

prices

value

Which quality best describes a producer with an absolute advantage?

efficient

fast

accurate

prolific

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?

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.

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.

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.

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.

This table shows the number of employees needed to fill lunch orders at several food trucks.Food Truck Number of Lunch Orders Number of Employees Frank’s Falafels 20 per hour 2 Kimchi Kim’s 25 per hour 3 Deli Delight 30 per hour 3 Lunch on the Go 25 per hour 2 Which food truck has the absolute advantage?

Frank’s Falafels

Kimchi Kim’s

Deli Delight

Lunch on the Go

Which scenario is an example of market saturation?

The single coffee shop in town usually has a long line of customers and tends to stay busy during business hours.

There are three shoe stores on one block in town, and they have trouble finding customers and making a profit.

A second health club will open because the only health club in town is too crowded to accept new customers.

It can be difficult to get reservations at the only upscale Ethiopian restaurant in town, and it is best to call in advance.

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

price

advertising

product features

image

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

the money the company earns after paying all of its production costs.

the total wages the company pays workers in its factories and stores.

the amount of money the company earns from selling an individual part.

the amount the company receives from the sale of all of its computer parts.

Why is pure competition considered an unsustainable system?

Price differentiation is often too minimal to matter.

Few barriers exist to entry, meaning that the market inevitably floods.

Consumers cannot distinguish between products.

Producers cannot make a profit if they keep dropping their prices.

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