WorksheetsMicoreconomics Unit Test Review Questions
Total questions: 55
Worksheet time: 28mins
In which type of business organization is the owner personally responsible for all financial obligations?
partnership
sole proprietorship
corporation
limited liability company
Two tire companies control 75% of the tire market in the country. What type market structure?
oligopoly
monopolistic competition
perfect competition
monopoly
Which is MOST likely a disadvantage to a corporation?
ability to sell stock
limited liability of stock holders
double taxation
unlimited liability
Corporate stockholders are not responsible for the debts of corporation. This is MOST likely
partnerships
limited liability
ability to raise capital
establishment of price ceilings
Joe and Bob want to start a business together where they will share both the responsibilities and the profits.
partnership
sole proprietorship
entrepreneurship
corporation
Jim and Rhonda have money to invest. They are worried about liability. Which business form?
proprietorship
monopoly
corporation
partnership
Coke and Pepsi. Which market structure would this represent?
monopoly
pure competition
monopolistic competition
oligopoly
Two cobblers in town control the shoe making business. Which market structure?
perfect (pure) competition
oligopoly
corporation
partnership
What are some of the usual barriers to entry?
Weak demand for product, low market price
High unemployment, poorly skilled labor, resource shortages
Licenses, patents, high start-up costs
Lacking government regulation, plentiful supply of labor
Which would represent price competition strategy?
Get the Most for Your Money!
The Highest Quality on Earth!
Forget the Rest, Stick with the Best!
From Our Family to Yours!
Which markets compete in non-price competition?
Perfect competition and monopolistic competition
Monopolistic competition and oligopoly
Monopoly and monopolistic competition
Oligopoly and perfect competition
For an industry to be perfectly competitive, what must exist?
Many firms selling identical items
There are no competitive markets
Many consumers wanting different items
Many firms selling different items
When a firm offers "Free Shipping", what type of competition does this BEST reflect?
Non-price competition
Pure competition
Price competition
Monopolistic competition
Why is there no competition in a monopoly?
There are too many substitutes.
Prices are set by the government.
The government forbids competition.
There are no close substitutes.
What would be a potential risk if Sarah sets up a sole proprietorship?
Sarah would risk nothing.
Sarah would risk losing partners.
Sarah would be liable for all costs and damages.
Sarah would lose her popularity.
What would be a disadvantage of getting a partner?
Have to share all of the profits with the partner.
Responsible for paying all shareholders.
Has to go through a government application process.
Responsible for all of the debts the business incurs.
Business organization has advantage of specialization, but disadvantage of unlimited liability.
oligopoly
sole proprietorship
corporation
partnership
Johnny earns $21.30 from shares he has invested in. What type of earning is this called?
capital gains
dividend income
taxes
interest income
The soft drink industry is an example of what type of market structure?
monopoly
open competition
oligopoly
pure competition
Which scenario best represents monopolistic competition?
Two restaurants open to compete with a national food chain.
A company is the sole provider of internet service in a city.
Two firms compete against to sell pearls in an urban market.
Stay at specific hotel because it has a pool with a slide.
How can firms engage in non-price competition?
Highest quality and lowest price
Coupons and convenient locations
Price wars and new products
Price match guarantees and brand recognition
Type of business organization - least input & decision-making on daily operations by owners?
monopoly
corporation
oligopoly
partnership
The demand curve has moved to the right on the graph. This shows that
the price for Twinkie-Doodles went down.
buyers and sellers cannot agree on a price.
the demand for Twinkie-Doodles has increased.
the supply of Twinkie-Doodles has decreased.
The new oven in Mr. Brown's bakery allows him to produce bread more efficiently & cheaply. What is MOST LIKELY effect?
the price drops and the quantity demanded decreases
the price rises and the quantity demanded decreases
the price rises and the quantity demanded increases
the price drops and the quantity demanded increases
Assuming that the graph follows the normal laws of economics, the line represents
demand
production possibilities
supply
equilibrium price
If the supply engineers increases at the same time that demand for these workers decreases, what would be the effect?
Wages would decline as the competition for jobs increases.
Wages would stay the same as job opportunities increase.
Wages would increase as competition for these workers increases.
Wages would increase as the number of workers increases.
The Law of Supply states that
when the supply of a product decreases, the price of the product falls.
the quantity supplied of a product will increase when the price of it decreases.
when the supply of a product increases, the price of the product rises.
the supply of a product is not affected by its price.
Which of these pairs is an example of complementary products?
sneakers and sandals
butter and margarine
hot dogs and hot dog buns
DVDs and VHS tapes
Which of these statements is TRUE of complementary products?
An increase in demand for one will cause a decreased demand for the other.
An increase in price of one will cause a decrease in the price of other.
An increased supply of one good will result in decreased supply of other.
An increase in demand for one will result in increased demand for other.
Money that individuals receive from businesses return to businesses in
the factor markets.
the purchase of land.
the product markets.
the payment for resources.
Labor and other factors of production are sold on resource markets. How are businesses involved in this flow?
Businesses sell goods and services on product markets.
On product markets, businesses sell factors of production.
On resource markets, individuals buy factors of production.
Businesses purchase goods and services on product markets.
What is meant by the statement "money is a medium of exchange"?
Money can be accumulated as a form of wealth.
Money is a measure of a product's value.
Money is a measure of societal status.
Money can be traded for goods and services.
If the supply curve shifts from S1 to S2 in the graph, and nothing else changes, what do you expect to happen?
The demand will fall.
The price will rise.
The price will fall.
The price will remain the same.
Which determinant MIGHT increase supply in the market?
An increase in the number of sellers of a product.
An increase in the price of inputs to make the product.
An increase in the price of complementary goods.
An increase in the number of consumers in the market.
What would be the situation if the price was moved from p2 to p1?
There would be a shortage of widgets.
The price would be too low.
There would be a surplus of widgets.
The price would be dropped.
To have demand, what must you have?
A basic need and a constant supply of the item.
The desire and the ability to pay for the item.
The ability to pay for the item.
A desire for the item.
What economic concept does this graph BEST illustrate?
Scarcity
Productivity
Law of demand
Law of supply
Using this diagram, what outcome can be predicted if individuals stopped purchasing goods?
Businesses would lose income.
Businesses would produce less goods.
Businesses would not be able to pay for resources.
Businesses would experience all of these economic outcomes.
An American company sells solar cells. What would introduction of a Chinese company that produces solar cells do to market?
Lower prices
Force the American company out
Raise prices
Eliminate demand
Which factor might cause an increase in the supply of a product?
A decrease in productivity
Fewer sellers in the marketplace
An increase in the cost of raw materials
The introduction of new technology
All of these would cause a shift to the left of the demand curve EXCEPT for:
Increased money supply.
Declining consumer spending.
Reduction in exports.
An increase in taxes.
Which of these would have a negative impact on the supply of mechanical pencils?
An increase in employee productivity.
Receiving a government subsidy to cover cost of production.
The increase in the cost of resources.
The company purchased faster technology.
From this graph, you can tell that a move from D1 to D3 would show:
A decrease in supply.
An increase in supply.
A decrease in demand.
An increase in demand.
What is the primary function of money in an economy?
To regulate the supply of goods.
To act as a medium of exchange.
To serve as a store of value.
To measure the wealth of a nation.
Which of the following is a characteristic of a perfectly competitive market?
Few sellers dominate the market.
Products are differentiated.
There are no barriers to entry.
Firms have significant control over prices.
What happens to the demand curve when consumer income increases?
The demand curve becomes steeper.
The demand curve becomes flatter.
The demand curve shifts to the left.
The demand curve shifts to the right.
Which of the following is a primary advantage of a sole proprietorship?
Limited liability
Ease of formation
Ability to raise capital
Shared decision-making
What happens to the equilibrium price when both supply and demand increase simultaneously?
The price will definitely fall.
The price will definitely rise.
The price change is uncertain without more information.
The price will remain unchanged.
Which of the following is a characteristic of an oligopoly?
Few firms dominate the market
Firms are price takers
Products are highly differentiated
Many small firms
What is a potential effect of a government-imposed price ceiling on a product?
Increase in supply
Shortage of the product
Surplus of the product
Decrease in demand
Which of the following is a characteristic of monopolistic competition?
High barriers to entry
Product differentiation
Few sellers
Identical products
What happens to the demand curve when consumer income increases for a normal good?
The demand curve shifts to the left
The demand curve shifts to the right
The demand curve becomes vertical
The demand curve remains unchanged
What is the primary advantage of a corporation over a sole proprietorship?
Ease of formation
Unlimited liability
Limited liability
Direct control by owners
Which factor is most likely to cause a decrease in the demand for a product?
An increase in the price of a complementary good
An increase in consumer income
A decrease in the price of a substitute good
A successful advertising campaign
In a perfectly competitive market, what is the role of individual firms in setting prices?
Firms have significant control over prices
Firms can set prices above market equilibrium
Firms are price takers and cannot influence market prices
Firms can set prices below market equilibrium
