Microeconomics

According to the model, which answer BEST explains what the spending of households and firms must equal in a closed economy?

• The spending of households and firms must equal the government spending on goods and services.

• The spending of households and firms must equal the profits received from foreign exports and imports.

• The spending of households and firms must equal the income received by the factors and goods and services markets.

• The spending of households and firms must equal the income received from taxes that households and firms pay to the government.

Where is equilibrium quantity located on a supply and demand graph?

• The point on the horizontal axis which would intersect with the supply curve.

• The point on the vertical axis which would intersect with the demand curve.

• The point on the vertical axis which would intersect with a line drawn through the point at which the supply and demand curves meet.

• The point on the horizontal axis which would intersect with a line drawn through the point at which the supply and demand curves meet.

How do businesses get factors of production according to the pure market circular flow of economic activity?

• from households through the resource market

• from government through the resource market

• from government through the product market

• from households through the product market

Anna likes to go to the movies, but since tickets cost $10 each, she only went to ten movies last year. This year, though, the theater reduced the price to $8 per ticket, so Anna went to 12 movies this year. Which of the following correctly summarizes Anna's response to the reduction in the price of movies?

• A. Anna's supply curve for movies shifted.

• B. Anna's demand curve for movies shifted.

• C. The quantity of movies supplied to Anna went up.

• D. The quantity of movies demanded by Anna went up.

How do businesses receive revenue in the product market?

• A. by providing consumption expenditures

• B. by providing factors of production

• C. by providing goods and services

• D. by providing factor payments

For which goal would the entrepreneur be BEST served by choosing to start a corporation rather than a sole proprietorship or partnership?

• raising capital for manufacturing and distribution

• maintaining control over product development

• getting the product to market quickly

• minimizing the long-term tax burden

What should Arrow A be labeled?

• expenditures

• income

• revenue

• wages

Which type of market structure results in many firms offering a variety of products?

• monopolistic competition

• pure competition

• monopoly

• oligopoly

What is the law of demand?

• If the price of a good increases, the amount a seller is willing to sell increases.

• If the price of a good increases, the amount a seller is willing to sell decreases.

• If the price of a good increases, the quantity consumers are willing to purchase decreases.

• If the price of a good decreases, the quantity consumers are willing to purchase decreases.

Which form or forms of business are owned by shareholders?

• Corporation

• Partnership

• Sole proprietorship

• Corporation and sole proprietorship