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Exam 2: Understanding Economics and How It Affects Business

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Question 1

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Resource development is the study of how to increase resources and to create the conditions that will make better use of those resources.

A) True
B) False

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Question 2

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Socialists believe that wealth should be more evenly distributed than what actually occurs in a free-market capitalistic system.

A) True
B) False

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Under the basic principle of supply, as the price goes down, manufacturers and suppliers of a product tend to supply less of the product to the market.

Demand refers to the quantity of a good that consumers are willing and able to buy at different prices at a specific time.

Several years ago, the nation of Equalia had a government-owned telecommunication system that lagged far behind other nations. In several rural areas, there was only a single landline phone for an entire village. The taxes collected for the purpose of maintaining the telephone system were very meager, so the notion of expanding service was almost impossible. The government of Equalia decided to sell the phone company to a private firm. The private firm expanded rapidly. It reported that even poor consumers were willing to pay for a private landline. This government decision and subsequent sale demonstrates move toward

America's business success is largely due to an economic and social climate that allows businesses to operate freely.

According to the invisible hand concept, the best way for a society to encourage the creation of jobs and the production of the products most wanted by consumers would be to

________ unemployment results when the demand for labor varies during the year.

The major benefit of socialism is that it creates strong incentives to work hard and take the risks associated with starting and operating a business.

Aubrey is the office manager of a service company. Recently, she approved the request for new computers and office equipment for the entire office. If Aubrey's company is like most service companies, she will probably see a big jump in the productivity figures reported for workers in her office.

One of the drawbacks of free markets is the fact that competition in such markets undermines the ability of price to adjust to its equilibrium value in the long run.

When the government runs a continual budget deficit, it increases the

Shimmer Sisters, a popular nail polish and cosmetics company, is gaining popularity among teens and young professionals. Differentiating itself from the sea of companies that compete for the same business, it focuses on creating products using trending color palettes and the finest ingredients. Shimmer Sisters clearly operates in an oligopolistic environment.

Which of the following is a basic right under capitalism?

One reason the CPI is monitored very closely by government, businesses, and workers is that

The nation of Forlornistan is reporting a decline in GDP for the fourth consecutive year, with no relief in sight. With unemployment at record levels and businesses failing faster than at any time in the past century, Forlornistan is likely experiencing a depression.

Shelly's company produces computers, phones, and tablets. About six months ago, Shelly began to keep track of number of hours worked at the company, and the resulting output. When she compared the results, she found that the number of workers (and the hours they worked) remained relatively steady over the past six months; however, the work site's output improved considerably. This indicates that

The study of how society chooses to employ resources to produce goods and services and to distribute them for consumption among various competing groups and individuals is known as demographics.

When the government attempts to stabilize the economy by changing taxes or government expenditures, it is using fiscal policy.

Both socialism and communism are variations of