Microeconomics Review

With respect to the circular flow model, businesses provide households with which of the following?

• taxes and interest

• labor and taxes

• goods, services, and incomes

• public goods and transfer payments

A volcano erupts in Hawaii that destroys or damages many of the orchards that supply the U.S. with pineapples. What will be the effect on price and quantity of pineapples sold, assuming all else is equal?

• Price will rise and quantity will also rise.

• Price will drop and quantity will also drop.

• Price will drop but quantity will rise.

• Price will rise but quantity will drop.

The use of money in an economy solves which of the following problems?

• scarcity

• the condition of opportunity cost

• an efficient means of economic exchange

• trade barriers

A market that has few barriers to entry, in which products that are not of identical quality and style are sold, and, therefore, firms can make greater-than-normal profits for short periods of time, is BEST described as

• monopolistic.

• oligopolistic.

• perfectly competitive.

• monopolistically competitive

A breakthrough in nanotechnology allows silicon chips for computers to be produced much more quickly and cheaply. If demand for computers remains unchanged, what will be the effect upon market price and supply?

• Both price and supply will rise.

• Both price and supply will fall.

• The supply will rise while the price falls.

• The supply will fall while the price rises.

All of the following are characteristics of perfectly competitive markets EXCEPT

• the firm's prices are kept confidential.

• production is similar in quality.

• there is a large number of buyers and sellers.

• there are few barriers to entering the market.

A market structure in which only one producer supplies a good that is in demand, thereby permitting them to set the price by how much they supply, is called

• competition.

• monopoly.

• oligopoly.

• conglomerate.

The market for labor would be considered a ________________ market.

• product

• factor

• wage

• monopolistic

A politician is worried that plane manufacturers will go out of business because profits are too low. This would mean many voters would lose their jobs. As a solution, they propose a price floor. What is the LIKELY result of this?

• a shortage of planes

• the problem will be solved without adverse effects

• an increase in the quality of the planes

• a surplus of planes

Amy just opened her own consulting firm. She loves being her own boss and not consulting with anyone before she makes decisions. The only downside is that she has invested all the money herself. If the business fails, she could go bankrupt. What kind of business is it?

• sole proprietorship

• partnership

• cooperative

• corporation