HON ECON Unit 2 Practice Test

Consider the smartphone industry where Apple, Samsung, Huawei, and Xiaomi each hold about 25 percent of the total market share. This is an example of:

• monopolistic competition

• oligopoly

• pure monopoly

• pure competition

Liability is the

• necessity to do a lot of paper work.

• requirement to offer fringe benefits.

• legal obligation to pay debts.

• opportunity of the sole proprietor to keep all profits after taxes.

An example of a barrier to entry is:

• high start–up costs.

• low start–up costs.

• differentiated products.

• government deregulation.

Which of the following is a product that might be offered in a perfectly competitive market?

• corn

• cell phone service

• electricity

• chicken sandwiches

Stocks are:

• promises to repay a loan.

• also known as bonds.

• issued by sole proprietorships.

• shares of ownership of a corporation.

Dr. Oz shares equal responsibility and liability with his colleagues in their medical practice. His practice is a:

• general partnership.

• franchise.

• corporation.

• sole proprietorship.

Which of the following is a disadvantage of a sole proprietorship?

• limited lifespan

• high taxes

• legal constraints

• difficult to start up

Which market structure would be easy to enter, but require lots of advertising to differentiate the new product?

• Pure competition

• Monopolistic competition

• Oligopoly

• Monopoly

All firms in a __________________________ market must accept the market price and are called price takers.

• pure competition

• monopolistic competition

• oligopoly

• monopoly

In a circular flow model, households receive payment for providing resources in the Factor market. This payment is known as:

• cost of production

• revenue

• income

• spending