Econ Midterm Review

An assembly line can increase a factory's productivity because it

• use a wide range of knowledge

• allows workers to focus on a specific task

• diversify their skills

• put in overtime hours

If the price of an item increases, demand for its substitutes

• decreases

• there is no way to tell

• increases

• is unaffected

What is the main difference between pure competition and monopolistic competition?

• firms in pure competition rely more heavily on advertising

• firms in pure competition have no substitutes to their goods

• firms in pure competition make more profits

• firms in pure competition are selling nearly identical, rather than differentiated goods

Jim says “as the price of something increases, the quantity demanded decreases.”

• Jim is incorrect, he means supply instead of quantity demanded

• incorrect, he means demand instead of quantity demanded

• correct, that is the law of supply

• correct, that is the law of demand

The Law of Supply states that , ,

• as prices decrease demand decreases,

• as prices increase quantity demanded decreases

• as prices increase, supply increases

• .as prices decrease, quantity supplied decreases

In which market structure to firms have the greatest control over their own prices?

• Monopolistic competition

• Pure competition

• Monopoly

• Oligopoly

In which type of business organization does the owner have the MOST liability?

• partnership

• sole proprietorship

• monopoly

• corporation

Assume Coke and Pepsi operate as an oligopoly. Which statement BEST represents this?

• Coke and Pepsi are major corporations with stockholders

• Coke and Pepsi taste different, but are marketed the same way

• Coke and Pepsi own many different "brands"

• Coke and Pepsi control over 75% of this industry

Steel Beam Inc. is looking to purchase a new steel-processing machine and factory. In the circular flow diagram, this transaction will take place in the

• product market.

• government controlled sector.

• resource market

• foreign exchange market.

Sellers enter a market looking to make as much money as possible by offering a good or service. Buyers enter a market looking to spend as little as possible for a good or service. This interaction determines the economic system of a country..

• market clearing price of a good.

• production possibilities curve

• productivity of a business.

• circular flow processes