WorksheetsEcon Unit 2 Test
Total questions: 38
Worksheet time: 19mins
Liam is considering starting a business and is evaluating different business structures. He learns that one of the disadvantages of forming a corporation is:
Limited liability for shareholders
Ability to raise capital easily
Perpetual existence of the company
Double taxation on profits
In a certain region, there are hundreds of dairy farms, each selling milk that is identical in quality and price. No single farm can affect the market price, and consumers are fully aware of all available options. What type of market structure does this scenario illustrate?
Perfect competition
Oligopoly
Monopoly
Monopolistic competition
In a certain city, there is only one company that supplies water to all households, and no other firms are allowed to enter the market. The company sets the price and controls the entire supply of water. What type of market structure does this represent?
Oligopoly
Monopoly
Monopolistic Competition
Perfect Competition
According to the law of demand, what happens to the quantity demanded when the price of a good increases?
The quantity demanded decreases.
The quantity demanded remains unchanged.
The quantity demanded increases.
The quantity demanded becomes zero.
Which type of market structure is characterized by many firms selling products that are similar but not identical?
Monopolistic competition
Oligopoly
Monopoly
Perfect competition
In the circular flow model, which of the following best describes the flow of money?
The flow from households to firms for goods and services.
The flow of goods from firms to households.
The flow of resources from firms to households.
The flow from households to the government.
What does the law of demand state?
Which of the following factors would cause a shift in the demand curve?
A change in the price in the goods
Which of the following best describes a normal good?
What does the law of supply state?
Which of the following would cause a shift in the supply curve to the right?
If the government imposes a tax on the production of a good, what is the likely impact on the supply curve?
What will happen if a products price is set below the equilibrium price?
What will happen if a products price is set above the equilibrium price?
A surplus will occur.
What point on a supply and demand graph is the equilibrium price?
Which of the following is a primary benefit for shareholders in a corporation?
Protection from personal liability for business debts
Direct control over daily business operations
Obligation to pay business debts personally
Simplified tax filing process
What is a price ceiling?
What is a price floor
In the circular flow diagram, which of the following represents the flow of goods and services?
The flow from firms to households.
Which of the following is a characteristic of perfect competition?
Many buyers and sellers with identical products.
Which market structure is characterized by a single firm that controls the entire market?
Which of the following is considered a drawback of forming a corporation?
Separation of ownership and management
Ease of transferring ownership
Access to more resources
Profits may be taxed twice
In which market structure do firms have some control over the price due to product differentiation?
What is a key feature of an oligopoly?
What is a key characteristic of a sole proprietorship?
Company X sells a good where there is a lot of competition due to the products being similar. Companies enter and leave the market often. Company X stays in business because they constantly use advertising to make their product seem different. In which market structure does Company X operate?
What is one of the primary disadvantages of a partnership?
What is one of the key advantages of forming a corporation?
Limited liability protection for shareholders and Unlimted Lifespan
Which of the following is a disadvantage of a corporation?
What happens to the demand for a normal good when consumers' incomes rise?
It stays the same.
It decreases.
It increases.
It becomes unpredictable.
A small town has only one electricity provider, and residents have no alternative options for purchasing electricity. The company has significant control over the price and supply of electricity in the town. Which market structure best describes this situation?
A farming community has many small farms that produce identical crops such as wheat and corn. None of the farms can influence the market price because there are so many producers, and buyers have full information about the product's quality and price. Which market structure best describes this situation?
Mia owns a factory that produces bicycles. Which of the following situations would cause the supply curve for bicycles to shift to the right?
Increase in production costs
Decrease in demand for the product
Imposition of new taxes on production
Decrease in production costs
Henry regularly buys apples from his local market. According to the law of demand, what happens to the quantity of apples Henry demands when the price of apples increases?
The quantity demanded decreases.
The quantity demanded remains unchanged.
The quantity demanded increases.
The quantity demanded becomes zero.
In the circular flow diagram, what do households provide to firms in exchange for income?
