Lesson 1 - The Business Environment - Section A

Which of the following responses best define the term "demand"?

• the willingness and ability of buyers to purchase a product, good or service

• a want and need felt the by the consuming public in a free market system

• an inner desire that must be satisfied

• an order given to a supplier of a much-needed product

Which of the following best defines the term "business cycle"?

• the total quantity of goods and services produced by an economic system during a given period

• the measure of economic growth that compares how much a system produces with the resources needed to produce it

• the pattern of short-term ups and downs in an economy

• the total quantity and quality of goods and services that a country's citizens can purchase with the currency used in their economic system

When identifying the factors of production, the term ___ may also be used to refer to labor.

• human resources

• contract resources

• production resources

• management resources

______ includes the physical and intellectual contributions people make while working.

• capital

• government

• entrepreneurship

• labor

In a market economy, the factors of production are allocated by

• the federal government

• the state commerce departments

• producers and consumers

• available natural resources

In a(n) _____ economy, the price of apples will be determined by supply and demand.

• ownership

• planned

• market

• essential

The law of demand maintains that buyers will purchase (demand) more of a product as its price....

• drops

• rises

• fits a person's personal planning budget

• tends to stay the same

When the price at which the quantity of a product willing to be purchased by customers and the quantity of product willing to be made by producers are equal, this is known as

• the break-even price

• the market price

• the equilibrium price

• either the market price or the equilibrium price

In a market characterized by ______, all firms must be small and the number of firms in the industry must be large.

• oligopoly

• stable competition

• monopolistic competition

• perfect competition

Louie discovered that when he dropped the price of his paintings, more people were interested in buying. Louie is experiencing _______.

• mercantilism

• market price of variations

• the law of supply

• the law of demand