Unit 3

Who developed the concept of the invisible hand guiding the economy?

• John Maynard Keynes

• Karl Marx

• Adam Smith

• Milton Friedman

What term do economists use to describe the self-regulating nature of the marketplace?

• Market equilibrium

• Invisible hand

• Supply and demand

• Fiscal policy

What is an economic side effect of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume?

• Inflation

• Externality

• Monopoly

• Subsidy

What is a beneficial side effect that affects an uninvolved third party called?

• Negative externality

• Positive externality

• Market failure

• Price ceiling

What is a characteristic of monopolistic competition?

• Homogenous products

• No barriers to entry

• Few firms

• Price taker

What is mutual interdependence a characteristic of?

• Perfect competition

• Monopoly

• Oligopoly

• Monopolistic competition

What is an example of non-price competition?

• Lowering prices

• Increasing production

• Advertising image

• Reducing costs

Which of the following is NOT a characteristic of a monopoly?

• Single seller

• High barriers to entry

• Total control over price

• Many close substitutes

What determines how much competition exists in a market?

• The number of employees

• The characteristics of the market

• The level of technology

• The amount of capital

Which factor is NOT an example of non-price competition?

• Service level

• Location

• Price reduction

• Advertising image