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Exam 2: Understanding Economics and How It Affects Business

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Question 21

True/False

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Economic progress can occur when business owners provide jobs and economic growth for their employees, their communities, and themselves.

A) True
B) False

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Question 22

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___________ exists when a large number of firms produce goods that are similar but are perceived by buyers as being different.

A) Perfect competition
B) Monopolistic competition
C) Oligopoly
D) A monopoly

E) None of the above
F) A) and B)

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Question 23

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On its website, Papa John's Pizza compares itself to the competition with the following message: "better ingredients, better pizza". The company wants to achieve:

In recent years, U.S. manufacturing sector has experienced ___________ productivity.

In the service sector of the economy, the influx of machinery such as computers increases output per worker, but does little to improve the quality of services.

The concept of the invisible hand begins with the assumption that the primary motivation of entrepreneurs is that they will prosper from their own hard work.

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:

Macroeconomics is the economic perspective that looks at the operation of a nation's economy as a whole.

An economist is examining how consumers in the automobile market have responded to recent price increases by car manufacturers. He is examining a microeconomic situation.

Adam Smith's research focused on determining the best way to distribute a fixed amount of resources, rather than on how to create more wealth.

The study of how to increase the amount of available resources and create conditions that will make better use of these resources is known as:

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

Which of the following would be a topic emphasized in a macroeconomics course?

The top tax rate on personal income in most socialist economies is usually lower than the top tax rate on personal income in capitalist economies.

Roundland is a nation with an economic system that closely approximates pure capitalism. While Roundland's economy is likely to generate a great deal of wealth, it may do a poor job of providing an acceptable level of income for the elderly or disabled.

Which of the following indicators provides the clearest indication that an economy is experiencing deflation?

Socialism and communism are both variations of a free-market economy.

Adam Smith believed that an economic system couldn't truly prosper unless people were taught to value the welfare of others above their own personal gain.

When the market price of a good is below the equilibrium price, and all other determinants are unchanged:

Microeconomics focuses on the decisions and behavior of people and organizations in particular markets.