Quiz on Market Competition

Review the table and answer the question. Which industry is in a perfectly competitive market in a country with a market economy?

• Country 1’s petroleum industry

• Country 2’s petroleum industry

• Country 1’s computer industry

• Country 2’s computer industry

A popular social media influencer creates a series of videos promoting a new skin care product. What economic impact is this MOST LIKELY to have?

• It will likely lead to an increase in the price of the product.

• It will likely lead to an increase in taxation of the product.

• It will likely lead to a decrease in demand for the product.

• It will likely lead to a decrease in production of the product.

Use the graph to answer the question. If the market for Product X is a monopoly, how might the business that produces Product X raise the equilibrium price of the product?

• The business can increase production of product X, because doing so would shift the supply curve left and create a surplus.

• The business can increase production of product X, because doing so would shift the supply curve right and create a shortage.

• The business can decrease production of product X, because doing so would shift the supply curve right and create a surplus.

• The business can decrease production of product X, because doing so would shift the supply curve left and create a shortage.

Read the passage and answer the question. Darryl owns and operates Darryl’s Dings and Dents, an auto repair shop where he repairs collision damage. Recently he was served with a lawsuit naming both him and the shop as defendants. The plaintiff claims that Darryl incorrectly reattached a fender on the plaintiff’s car. The fender came loose while the plaintiff was driving, causing it to hit and damage the plaintiff’s wheel and the plaintiff’s car to strike a guardrail. The plaintiff was severely injured and is seeking damages of over $500,000. Darryl’s personal assets would be LEAST protected from the lawsuit if Darryl’s Dings and Dents was organized as

• a limited liability partnership.

• a corporation.

• a sole proprietorship.

• a limited liability company.

Why might the owner of a new technology business decide to incorporate her company as a corporation rather than operating as a sole proprietorship?

• She wants to simplify the tax process for her company.

• She wants to maintain complete control over her company.

• She wants to hire employees to work for her company.

• She wants to raise capital by selling stock in her company.

In which situation will the quantity demanded in the market for a particular product exceed the quantity supplied for that product?

• when the government creates a price floor that is equal to the market price for the product

• when the government creates a price floor that is higher than the market price for the product

• when the government creates a price ceiling that is equal to the market price for the product

• when the government creates a price ceiling that is lower than the market price for the product

Use the graph to answer the question. What would happen to the equilibrium price of Product X if the supply of Product X increased?

• It would rise.

• It would fall.

• It would fluctuate.

• It would stay the same.

Use the circular flow diagram to answer the question. How do goods and services flow between households and businesses?

• from households to businesses through the product market

• from businesses to households through the product market

• from households to businesses through the resource market

• from businesses to households through the resource market

Which of the following statements about price floors and price ceilings is correct?

• Price floors and price ceilings are set by consumers.

• Price floors and price ceilings are set by businesses.

• Price floors result in surpluses, while price ceilings result in shortages.

• Price floors result in shortages, while price ceilings result in surpluses.

Sole proprietorships face unlimited liability, which means the

• owner is able to enjoy all profits that the company earns.

• business is operating in a heavily regulated sector of the economy.

• owner is personally responsible for debts incurred by the business.

• business's creditors will not be able to sue the owner of the business.