ECON - Unit 2 Practice Test

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

• Pure competition

• Monopolistic competition

• Oligopoly

• Monopoly

Stocks are:

• promises to repay a loan.

• also known as bonds.

• issued by sole proprietorships.

• shares of ownership of a corporation.

Most large businesses are

• sole proprietorships.

• general partnerships.

• corporations.

• cooperatives.

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

If you carry a $1,000 deductible on your collision coverage and you get in an accident that causes $5000 in damages to your vehicle, how much will the insurance company pay to repair the damages to your vehicle?

• $1,000

• $4,000

• $5,000

• $0, it’s not covered

A dividend is a portion of a company’s profit paid out to

• the government for taxes

• shareholders of the company

• each partner of the business

• the sole proprietor

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

• corn

• cell phone service

• electricity

• chicken sandwiches

Every vehicle being driven on public roads is required to have:

• comprehensive coverage

• accident coverage

• collision coverage

• liability coverage

A one-firm industry is known as:

• monopolistic competition.

• oligopoly.

• monopoly.

• perfect competition.

An industry comprised of four firms, each with about 25 percent of the total market for a product is an example of:

• monopolistic competition

• oligopoly

• pure monopoly

• pure competition