ECON Book Final Part 2

Based on an analysis of the infographic, why do changes in supply due to input costs affect the price of the products?

• As input costs rise for butter, supply goes up, which would result in lower prices for butter in order for companies to avoid tax penalties
• As input costs rise for steel, supply goes down, which would result in higher prices for steel in order for companies to maintain profits
• As input costs decrease for butter, supply goes down, which would result in lower prices for butter in order for companies to pay employee wages
• As input costs decrease for steel, supply goes up, which would result in lower prices for steel in order for companies to pay dividends to shareholders

Which of the following would represent a government imposing a price ceiling in the rental housing market?

• The government encourages tenants to buy rental insurance in order to be prepared in case of housing emergencies
• The government limits the amount of rent that a landlord can charge in order to maintain reasonable housing prices.
• The government requires landlords to submit detailed paperwork on the cost of each of their rentals in order to monitor housing costs
• The government forces cities to designate a fixed number of rental units in order to ensure that there is enough housing available for its residents

"When you raise the price of employment, guess what happens? You get less of it."
—John Boehner, Speaker of the House of Representatives, February 2013
The speaker would argue against a minimum wage because it

• decreases the demand for workers
• increases the equilibrium wage rate
• sets minimum wages below the equilibrium rate
• decreases the supply of workers

"In 1890, Congress passed the Sherman Antitrust Act, which outlawed mergers and monopolies that limit trade between states." 
How did the legislation mentioned in the excerpt affect the operations of businesses in the United States?

• It increased the overall level of competition
• It increased the barriers to entry for all new firms
• It decreased the costs of production for new firms
• It decreased the excess supply of goods in many markets

Which factor allows firms in an oligopoly to set their own prices?

• Only a few firms control the majority of the market
• Each firm supplies a differentiated product
• High barriers to entry keep competitors from entering the market
• Government regulations allow such firms to set their own prices

Which of the following factors would likely result in the emergence of a monopolistically competitive market?

• New firms enter a market and provide close substitutes to existing products
• Existing firms take advantage of economies of scale to lower costs
• A few firms begin to dominate the market and set their own prices
• Firms begin to drop out of a market because of the inability to compete

What is the result of one firm controlling an entire market?

• The firm is able to keep out competitors by keeping entry costs high
• The firm is able to control regulation of its industry
• The firm is able to control demand for the products it offers
• The firm is able to set prices in a noncompetitive manner

How are markets with low barriers to entry and many firms most likely purely competitive?

• Large firms in these markets can affect the price of goods or services
• Large firms in these markets can affect the price of goods or services
• Existing firms are unable to take advantage of economies of scale
• Small firms in these markets are unable to affect the price of goods or services

"As a result, the prices that consumers pay and the revenue that suppliers receive accurately reflect how much the market values the inputs used to produce the product."
The result described in the excerpt is a characteristic of which type of market?

• Purely competitive
• Oligopoly
• Monopolistically competitive
• Monopoly

Which statement correctly analyzes an advantage of sole proprietorships?

• Sole proprietorships retain liability for debts, providing financial freedom to the owner
• Sole proprietorships require limited legal paperwork, making them simple and inexpensive to establish
• Sole proprietorships qualify for exemptions from federal and state tax obligations, increasing profits for the owner
• Sole proprietorships receive special treatment in regard to zoning laws, allowing owners to operate businesses in any location