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Unit 2 - Micro Review

Total questions: 59

Worksheet time: 31mins

Name
Class
Date
1.
Which statement is true about the circular flow diagram?
a)
A  Households are demanders in the product market and suppliers in the factor market
b)
A  Business are demanders in the product market and suppliers in the factor market.
c)
A  Households are demanders in the factor market and suppliers in the product market.
d)
 A  Businesses and households are not components of the circular flow diagram.
2.

Arrows 4 and 7 on this circular flow diagram demonstrate

a)

Goods & Services

b)

Expenditures

c)

Productive Resources

d)

Income

3.

The arrows 6 to 5 in this diagram represent which aspect of the economy?

a)

Productive Resources

b)

Goods and Services

c)

Rent, Wages, Interest, Profit

d)

Revenue

4.
In the circular flow model, what do individuals sell to the factor market
a)
Services
b)
Money
c)
Productive Resources
d)
goods
5.

In the PRODUCT market,

a)

firms buy goods and services from households

b)

firms sell goods and services to households

c)

firms sell resources to households

d)

firms buy resources from households

6.
The circular flow model of a market economy shows
a)
how profits are made
b)
what inputs are required for what outputs
c)
how many firms can support the needs of how many households
d)
the interactions between households and  firms in the free market
7.

A person stocks shelves at a grocery store and receives a wage. They have completed an exchange in which part of the circular flow model?

a)

Individuals

b)

Businesss

c)

Factor Market

d)

Product Market

8.

Someone buys a car in exchange for a large amount of money. They have completed an exchange in which part of the circuclar flow model?

a)

Product Market

b)

Factor Market

c)

Firms

d)

Individuals

9.

Money paid by a businesses in exchange for an individual's labor

a)

wages

b)

revenue

c)

income

d)

profit

10.

Money received by an individual from a business in exchange for their labor

a)

Income

b)

Wages

c)

Revenue

d)

Proft

11.

Money exchanged between an individual and a store for a good or service.

a)

Revenue

b)

Wages

c)

Rent

d)

Income

12.

When individuals work for businesses, what resource are they providing?

a)

Capital

b)

Labor

c)

Loans

d)

Raw materials

13.

When individuals work for businesses, what do they get in return?

a)

Capital

b)

Labor

c)

Income

d)

Raw materials

14.

Which of the following is a worker?

a)

Land

b)

Labor

c)

Capital

d)

Entrepreneurship

15.

According to the circular flow model where can you buy and sell a haircut?

a)

The Resource Market

b)

The Product Market

c)

The Labor Market

d)

The Barber Shop

16.

What does the government get from businesses and households?

a)

Capital

b)

Land

c)

Taxes

d)

Wages

17.

In the circular flow model, what do individuals SELL to businesses

a)

Services

b)

Money

c)

Resources

d)

Goods

18.

In the circular flow model, what do businesses provide to individuals and households?

a)

Goods and services

b)

Public goods and services

c)

Resources

d)

Taxes

19.
Sara’s Hair Palace is a small, locally owned beauty salon in Sterling. This represents what type of business?
a)
corporation
b)
partnership
c)
sole proprietorship
20.
Dan has $5,000. He wants to invest his money in the type of business that has the least amount of liability. In which type of business should he invest?
a)
corporation
b)
partnership
c)
proprietorship
21.
A business partnership has ___________ who share the risks and the profits.
a)
One owner
b)
No more than three owners
c)
Two or more owners
d)
Five or more owners
22.

In which of the following would one person be responsible for all of the risks but also receive all of the profits?

a)

Corporation

b)

Proprietorship

c)

Partnership

d)

Dual owner business

23.
Which of the following is an advantage of sole proprietorships:
a)
Limited liability
b)
Unlimited financial power
c)
Dual taxation
d)
Quick decision making
24.
Which of the following is an advantage of general partnerships:
a)
Limited capital
b)
Unlimited liability
c)
Easy to end
d)
Combined capabilities
25.
A business owner who prefers to maintain complete control of all business activities might consider structuring the venture as a(n)
a)
sole proprietorship
b)
general partnership.
c)
franchise
d)
 corporation.
26.

What type of business organization sells stock to raise money?

a)

Partnership

b)

Corporation

c)

Sole Proprietorship

d)

Limited Partnership

27.
Which business type makes up approximately 75% of all businesses?
a)
Sole Proprietorship
b)
Partnership
c)
Corporation
28.
Which business type has the most sales in the USA?
a)
Sole Proprietorship
b)
Partnership
c)
Corporation
29.
Why would a company need to issue stock?  
a)
To increase its' customer base.
b)
To raise money.
c)
To stop the government from regulating it.
d)
To show customers that it's successful.
30.
Disadvantages for this type of business include: owner pays for everything, hard to get money to start from the bank, owner might lack skills & unlimited liability.
a)
Sole Proprietorship
b)
Partnership
c)
Corporation
d)
Franchise
31.

Joe is starting a small home-based consulting business. He possesses computer knowledge but lacks marketing skills. The form of business ownership that Joe should consider establishing is a(n)

a)

corporation

b)

sole proprietorship

c)

monopoly

d)

partnership.

32.
Which of the following is a disadvantage of corporations:
a)
High taxes
b)
Unlimited life
c)
Unlimited liability
d)
financial power
33.
Most expensive to start
a)
Sole Proprietorship
b)
Partnership
c)
Corporation
34.
Shortest lifespan
a)
Sole Proprietorship
b)
Partnership
c)
Corporation
35.
An advantage of a corporation is that
a)
owners pay fewer taxes than owners of other forms of business.
b)
the business is subject to little government regulation.
c)
owners have limited liability for debt.
d)
owners have direct and immediate control over daily management of the business.
36.
Perfect competition is characterized by
a)
a large number of sellers and buyers.
b)
diverse products.
c)
sellers acting together to set prices.
d)
uninformed buyers and sellers.
37.
When a major car company lowers its prices, other car makers will probably 
a)
maintain existing prices.
b)
raise their prices.
c)
go out of business.
d)
lower their prices.
38.
A market structure in which one firm has a monopoly because of its location is a 
a)
natural monopoly.
b)
geographic monopoly.
c)
technological monopoly.
d)
government monopoly.
39.
Barry and two associates have been operating a business that is not going well. Barry is stressed out because the company is over $200,000 in debt and he knows that if it goes out of business, he and his two associates will have to pay it out of their own pockets. It sounds like Barry and his two associates have a 
a)
partnership.
b)
corporation.
c)
sole proprietorship.
d)
stock.
40.
Susan, Phil, Robert, and Martina are all lawyers. After several years of working for big firms, they decide to pull their resources and start their own law practice together. The four of them will make all their business decisions together and will share all of the profits and financial risk. Their new law firm is a 
a)
partnership
b)
corporation
c)
sole proprietorship
d)
monopoly
41.
Mr. Simpson is liable for all the debts of his company. Mr.Simpson has which type of business organization?
a)
sole proprietorship
b)
monopoly
c)
perfect competition
d)
corporation
42.
Which market has no competition?
a)
perfect competition
b)
oligopoly
c)
monopoly
d)
monopolistic competition
43.
Which market structure is BEST indicated by the soda market?
a)
monopoly
b)
pure competition
c)
oligopoly
d)
natural monopoly
44.
If Mark Etts expresses a desire to sell his corn at a local farmer's market, he must be aware that the product is standardized and that he will have no control over the price. The market structure he is MOST likely participating in is
a)
monopolistic competition
b)
oligopoly
c)
perfect competition
d)
monopoly
45.
Ramon decided to open his own software business. He borrowed money from a bank to buy computers and office equipment, and he hired one assistant. What is one DISADVANTAGE of Ramon's type of business organization? 
a)
limited liability
b)
ease of start-up
c)
flexibility
d)
unlimited liability
46.
Which scenario is an example of a monopoly? 
a)
A local water company is the sole provider of water for a small town.
b)
A dry cleaner specializes in environmentally friendly cleaning methods.  
c)
A farmer produces green beans for sale at a farmer's market.
d)
A small number of cereal companies produce most of the cereal on the market.
47.
Which type of business organization has the advantage of limited liability but the disadvantage of less control over business decisions?
a)
perfect competition
b)
partnership
c)
sole proprietorship
d)
corporation
48.
An industry that is dominated by a few large firms is 
a)
monopolistic competition.
b)
a monopoly.
c)
perfect competition.
d)
an oligopoly.
49.
Which market structure involves selling identical products?
a)
Perfect Competition
b)
Monopolistic Competition
c)
Oligopoly
d)
Monopoly
50.

Google controls 67% of the web search market. The company has grown and branched off into email, online maps, GPS tracking systems, online data storage and mobile phones. There are competitors like Microsoft and Yahoo, but they own just 18% and 11% of the market, respectively.

a)

Perfect competition

b)

Monopolistic competition

c)

Oligopoly

d)

Monopoly

51.
Which is NOT a characteristic of a monopoly?
a)
Seller sets the market price
b)
Entry into the market is easy
c)
Firm sells a unique product
d)
One seller
52.
The market for milk is an example of perfect competition. Why?
a)
Sellers offer a nearly identical product
b)
Anyone can start a dairy farm or leave the dairy business at any time
c)
Many people buy and sell milk
d)
All of the above
53.
The town of Utopia has three gas stations. The owners of these gas stations make decisions together about when to raise and lower gas prices. It would be difficult for another gas station to enter this market. Which market structure best describes the market for gas in Utopia?
a)
Perfect competition
b)
Monopolistic competition
c)
Oligopoly
d)
Monopoly
54.

List the four market structures in order from LEAST competitive to MOST competitive.

a)

Oligopoly, Monopoly, Perfect Competition, Monopolistic Competition

b)

Perfect Competition, Oligopoly, Monopoly, Monopolistic Competition

c)

Monopoly, Oligopoly, Monopolistic Competition, Perfect Competition

d)

Monopoly, Monopolistic Competition, Perfect Competition, Oligopoly

55.
There are many sellers of blue jeans.  Each blue jean seller makes their product slightly different to set it apart from others. There is free entry and exit into the blue jean market. Which market structure does this describe?
a)
Perfect Competition
b)
Oligopoly
c)
Monopoly
d)
Monopolistic Competition
56.
Choose the example that goes best with an oligopoly.
a)
apples
b)
cell phone providers
c)
utilities
d)
clothing
57.

Which of the following industries is an example of a monopoly?

a)

utilities/water

b)

department stores

c)

auto industry

d)

commercial airlines

58.

A market that has a few sellers of basically the same goods.

a)

Perfect Competition

b)

Pure Monopoly

c)

Monopolistic Competition

d)

Oligopoly

59.

Public utilities are an example.

a)

Perfect Competition

b)

Natural Monopoly

c)

Monopolistic Competition

d)

Oligopoly

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