Chapter 3 Economics Test

Who answers the 3 basic economic questions in a free enterprise system?

• Government

• Individuals

Voluntary exchange is beneficial to both parties involved.

• True

• False

Which of the following is NOT one of the features of a free enterprise system?

• private property

• Economic incentives

• competition

• taxes

Calculate the profit/loss for the following:

Total Revenue = 400

Total costs= 322

• $78 loss

• $78 profit

• $722 profit

• $722 loss

Calculate the total loss/profit:

Total Costs=$4,555

Total Revenue= $4,323

• $232 loss

• $232 profit

• $8878 profit

• $8878 loss

Apple launches a new "smart sunglasses." For the first year they take heavy losses, what does that signal to other companies.

• There is demand for smart sunglasses

• Other companies should start to produce "smart sunglasses" to compete with Apple

• Other companies should NOT produce "smart sunglasses"

• All of the above

Calculate the total profit/loss using the information provided:

Quantity produced/sold: 10

Average Cost: $10

Total Cost:

Price $12

• $20 loss

• $20 profit

• $100 profit

• $100 loss

Calculate the quantity sold/produced.

Price = $4

Average Cost=$3

Profit= $100

• 12

• 50

• 300

• 100

A business firm earns $5,000 by selling 1,000 units of a good at $6.99 each. What is the average cost of the good?

• $.99

• $1.50

• $3.00

• $1.99

The price of a good times the number of units of the good sold equals...

• profit

• total revenue

• total cost

• average cost