Economics for Business Test Bank
Course Introduction
Economics for Business introduces students to fundamental economic concepts and their application in the business environment. The course covers both microeconomic and macroeconomic principles, emphasizing how market forces, consumer behavior, and government policies influence business decisions. Students will explore topics such as supply and demand, market structures, pricing strategies, production costs, and the impact of fiscal and monetary policy on businesses. Through real-world case studies and practical examples, the course equips students with analytical tools to interpret economic trends and make informed business decisions.
Recommended Textbook
Microeconomics 9th Edition by William Boyes
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22 Chapters
2413 Verified Questions
2413 Flashcards
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Page 2
Chapter 1: Economics: The World Around You
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90 Verified Questions
90 Flashcards
Source URL: https://quizplus.com/quiz/48925
Sample Questions
Q1) A positive (nonzero) price for a good means the good is in surplus.
A)True
B)False
Answer: False
Q2) In its most fundamental sense,economics is the study of:
A)production and cost.
B)supply and demand.
C)scarcity and choice.
D)specialization and trade.
E)externality and public goods.
Answer: C
Q3) The statement,"All Americans should be entitled to public health care," made by a politician would be considered a:
A)positive statement.
B)macroeconomic statement.
C)microeconomic statement.
D)normative statement.
E)model.
Answer: A
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Page 3
Chapter 2: Choice, opportunity Costs, and Specialization
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95 Verified Questions
95 Flashcards
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Sample Questions
Q1) Specialization and trade do not allow individuals,firms,or even nations to acquire goods that lie beyond their production capabilities.
A)True
B)False
Answer: False
Q2) A point outside the production possibilities curve [PPC]:
A)represents inefficient use of resources.
B)may be due to unemployment.
C)is attainable if all resources are used efficiently.
D)represents more resources than are currently available.
E)will never be attainable,even if the quantity of resources increases.
Answer: D
Q3) If an economy is operating at a point outside the PPC,either the society has resources that are not being fully used or production is not efficient.
A)True
B)False
Answer: False
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Chapter 3: Markets, Demand and Supply, and the Price System
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98 Verified Questions
98 Flashcards
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Sample Questions
Q1) When a market is in surplus,there is pressure for the price to move upward.
A)True
B)False
Answer: False
Q2) Given that resources can be allocated by the government,the market,a random process,or on a first-come first-serve basis,which of the following statements is true?
A)The market system is not entirely fair but it creates incentives to increase supplies and improve standards of living.
B)The random process of allocation allows individuals to acquire purchasing power and enhances the value of the resources that they own.
C)Since the government system does not distinguish between those who have income and those that do not,government allocation of resources is the most efficient.
D)There will be no shortages under the first-come first-serve basis of allocation.
E)A random process of allocation is fair in the sense that everyone gains and there are no losers.
Answer: A
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Chapter 4: The Market System and the Private and Public Sector
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) When the government sector is included in the circular flow diagram,the total value of private production will equal the value of household income.
A)True
B)False
Q2) When the government's spending is less than tax revenue,it implies that:
A)the government budget is balanced.
B)the government is running a deficit.
C)there is a budget surplus.
D)there is a higher chance of default by the government.
E)the government needs to borrow from the central bank.
Q3) An import is defined as:
A)a purchase of goods or services from another country.
B)a business transaction between two or more domestic firms.
C)a sale of goods or services to another nation.
D)a tariff on foreign merchandise.
E)a trade agreement between two industrial countries.
Q4) A financial intermediary accepts deposits from savers and makes loans to borrowers.
A)True B)False
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Chapter 5: Elasticity: Demand and Supply
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132 Verified Questions
132 Flashcards
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Sample Questions
Q1) Refer to Figure 5.1.The demand curve E is most likely to represent the demand for:
A)alcohol by an alcoholic.
B)a life-saving drug.
C)holiday travel packages.
D)a particular brand of breakfast cereal.
E)air conditioning during a hot summer.
Q2) _____ measures the percentage change in quantity demanded caused by a given percentage change in the price of a related good.
A)Income elasticity of demand
B)Cross-price elasticity of demand
C)Advertising elasticity of demand
D)Price elasticity of demand
E)Point elasticity
Q3) A perfectly inelastic demand curve is represented by an upward rising straight line.
A)True
B)False
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Chapter 6: Consumer Choice
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142 Verified Questions
142 Flashcards
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Sample Questions
Q1) Refer to Table 6.3.Marginal utility diminishes for good A from the _____ unit.
A)6<sup>th</sup>
B)4<sup>th</sup>
C)3<sup>rd</sup>
D)2<sup>nd</sup>
E)1<sup>nd</sup>
Q2) According to Table 6.2,marginal utility is negative _____.
A)for any number of avocados
B)up to five avocados
C)only for one or two avocados
D)only after five avocados are consumed
E)only after the first avocado is consumed
Q3) As you move along an indifference curve,your total utility increases or decreases depending on whether it's an upward or downward movement.
A)True
B)False
Q4) Marginal utility is negative when total utility is increasing.
A)True
B)False
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Chapter 7: Supply: The Costs of Doing Business
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106 Verified Questions
106 Flashcards
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Sample Questions
Q1) If a firm doubles its resources and generates an output level which is more than double,it is said to be experiencing:
A)economic fluctuations.
B)recession.
C)diseconomies of scale.
D)increasing marginal returns to a factor.
E)economies of scale.
Q2) Diminishing marginal returns means that as you combine more units of a variable resource with a set of fixed resources:
A)the average physical product increases at an increasing rate.
B)the marginal physical product decreases.
C)the total production decreases.
D)the marginal physical product becomes negative.
E)the marginal physical product increases at a decreasing rate.
Q3) Every firm has to bear its fixed costs even when it produces nothing.
A)True
B)False
Q4) Overhead costs are identical to fixed costs.
A)True
B)False
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Chapter 8: Profit Maximization
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122 Verified Questions
122 Flashcards
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Sample Questions
Q1) In Figure 8.3,what is the total cost of producing 140 units of the output?
A)$40
B)$55
C)$300
D)$5,600
E)$7,700
Q2) In contrast to both perfect competition and monopolistic competition,an oligopoly market structure is characterized by:
A)price discrimination.
B)a perfectly inelastic demand curve.
C)the presence of infinite number of firms.
D)only differentiated products.
E)difficulty in the entry of new firms.
Q3) The daily vegetable market is an example of oligopoly.
A)True
B)False
Q4) The primary goal of any business firm is to maximize social welfare.
A)True
B)False
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Chapter 9: Perfect Competition
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135 Verified Questions
135 Flashcards
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Sample Questions
Q1) The permanent shut down point of a perfectly competitive firm in the long run is:
A)the minimum point of the AVC curve.
B)the minimum point of the MC curve.
C)the minimum point of the AR curve.
D)the minimum point of the ATC curve.
E)the minimum point of the AFC curve.
Q2) A firm will shut down permanently if total revenue is not sufficient to pay for total costs in the long run.
A)True
B)False
Q3) For a farmer,the long run would be the current growing season,where she can vary the amount of irrigation,pesticides,and fertilizer on a fixed number of acres planted.
A)True
B)False
Q4) In long-run equilibrium in perfect competition,the entry and exit of firms will drive economic profits to zero.
A)True
B)False
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11
Chapter 10: Monopoly
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118 Verified Questions
118 Flashcards
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Sample Questions
Q1) Which of the following is true of a firm that can successfully practice price discrimination?
A)Its total revenue is often reduced.
B)It appropriates a part of the consumer surplus.
C)It has no way of distinguishing between types of customers.
D)It has no market power in the industry.
E)It must be a perfectly competitive firm.
Q2) If a firm is able to collect the entire producer surplus,it is said to have practiced perfect price discrimination.
A)True
B)False
Q3) A monopolist maximizes profit:
A)by charging the highest possible price on the demand curve.
B)by charging a price that equals its marginal cost.
C)by producing a level of output where the average-cost curve intersects the demand curve.
D)by producing a level of output where marginal revenue equals marginal cost.
E)by charging a price equal to its average total cost.
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Chapter 11: Monopolistic Competition and Oligopoly
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114 Verified Questions
114 Flashcards
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Sample Questions
Q1) In the long run,in a monopolistically competitive market:
A)marginal revenue is greater than average revenue.
B)price equals marginal cost.
C)price equals minimum average total cost.
D)the firms earn positive economic profits.
E)resources are inefficiently allocated .
Q2) Which of the following is not an example of nonprice competition?
A)Kellogg's introduces Froot Loops with Lemonberry Swirls.
B)Sterling Planet provides consumers the opportunity to purchase renewable electricity in upstate New York.
C)Mountain Dew sells "Livewire" orange soda in the summer of 2003.
D)Nissan lowers the interest rate charged for new automobile financing.
E)Honda produces a hybrid version of its Civic.
Q3) Strategic behavior occurs when:
A)there are a large number of firms selling identical products.
B)there is only one firm in the market.
C)the firms have no command over the prices of the good they produce.
D)the firms can take any decision irrespective of what their rival does.
E)what is best for a firm depends on what his rival does.
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Page 13
Chapter 12: Antitrust and Regulation
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) The International Communication Network which is the successor of GATT settles trade disputes among its member countries.
A)True
B)False
Q2) Under the License Raj system in India:
A)the producers having the licence could produce as much as they wanted.
B)the producers were allowed to manufacture goods only for the government.
C)only the producers having the licence were allowed to import inputs from abroad.
D)producing beyond the specified limit was a punishable offence.
E)the producers could only produce to meet their subsistence needs.
Q3) An example of the opportunity costs involved with social regulation would be:
A)the monetary costs of hiring administrative assistants to fill out OSHA safety reports.
B)the environmental costs of pollution control required under the Clean Air Act.
C)the monetary costs of laboratory trials required to try out a new drug.
D)the lives that are lost because new drugs are not introduced quickly enough.
E)the monetary cost of manufacturing a life saving drug.
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Chapter 13: Market Failures, Government Failures, and Rent Seeking
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121 Verified Questions
121 Flashcards
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Sample Questions
Q1) According to Table 13.1,at the social equilibrium:
A)4 units of output is produced.
B)5 units of output is produced.
C)2 units of output is produced.
D)3 units of output is produced.
E)1 unit of output is produced.
Q2) Under a marketable permit system,if the government reduces the quantity of permits,the price of each permit will increase.
A)True
B)False
Q3) When the government imposes a tax on production of a commodity:
A)production will invariably increase.
B)the cost of production increases,so the supply curve shifts to the left.
C)the benefits of consumption increases,so the demand curve shifts to the right.
D)there is no change in demand or supply.
E)both the demand and supply curves shift to the right.
Q4) A market in which adverse selection occurs is often called a lemons market.
A)True
B)False
Page 15
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Chapter 14: Resource Markets
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112 Verified Questions
112 Flashcards
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Sample Questions
Q1) Firms are consumers and households are the producers in the _____.
A)stock market
B)bond market
C)labor market
D)product market
E)underground market
Q2) A firm that was initially a monopsonist but has to buy from a competitive resource market all of a sudden will:
A)buy more amount of resources and pay a higher price for these resources.
B)buy the same amount of resources and pay a higher price for these resources.
C)buy less amount of resources and pay a lower price for these resources.
D)buy less amount of resources and pay a higher price for these resources.
E)buy more amount of resources and pay a lower price for these resources.
Q3) If government-assured medical and other benefits increase the labor costs,everything else remaining constant,then firms will tend to hire more of the other resources instead of labor.
A)True
B)False
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Chapter 15: The Labor Market
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117 Verified Questions
117 Flashcards
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Sample Questions
Q1) When people prefer to obtain medical,or legal services from white males,although they charge high prices for their services,it is termed as:
A)producer prejudice.
B)employer prejudice.
C)worker prejudice.
D)occupational segregation.
E)consumer prejudice.
Q2) From Figure 15.3,calculate the amount of the wage differential.
A)$6
B)$18
C)$2
D)$20
E)$15
Q3) When people are separated into different jobs on the basis of sex,it is referred to as:
A)statistical discrimination.
B)employer prejudice.
C)worker prejudice.
D)occupational segregation.
E)occupational crowding.
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Page 17
Chapter 16: Capital Markets
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) The amount that a risk averse person requires to take on risk is called:
A)risk arbitrage.
B)risk bonus.
C)risk premium.
D)risk capital.
E)risk rate.
Q2) When a new generation of computers that are faster and more powerful than the previous generation are introduced into the resource market:
A)many firms do not change their demand for capital.
B)many firms increase their demand for capital.
C)many firms decrease their demand for capital.
D)the quantity demanded of capital declines.
E)the quantity demanded of capital increases.
Q3) When a price rise of an asset can be justified by fundamental concepts and past experiences,then such a price rise does not constitute a classic bubble.
A)True
B)False
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Page 18
Chapter 17: The Land Market and Natural Resources
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55 Verified Questions
55 Flashcards
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Sample Questions
Q1) In the market for hardwood,everything else held constant,if the rate of interest increases:
A)the price of the hardwood will fall today.
B)the lumberjacks will harvest fewer trees today.
C)prices of boats and furniture will increase in the present period.
D)the lumberjacks will harvest all the trees leaving nothing for the future.
E)the price of the hardwood will fall in the future.
Q2) An increase in economic rent is simply a transfer from the buyer to the seller without any change in quantity.Identify the underlying assumption.
A)Quantity supplied remains unchanged even when economic rent increases.
B)Quantity supplied is positively related to economic rent.
C)The relation between quantity supplied and economic rent is indeterminate for nonrenewable resources.
D)Bargaining power of buyers is greater than sellers.
E)Consumer surplus is a positive function of economic rent.
Q3) The supply of land being fixed,the earnings from land are called transfer earnings.
A)True
B)False
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Chapter 18: Aging, Social Security and Health Care
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88 Flashcards
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Sample Questions
Q1) The ratio of the number of people in the population aged 65 and older to the number of people aged 20 to 64 has risen in most of the developed countries as:
A)longevity has declined and the families have had many children.
B)the family planning laws have been relaxed.
C)birth rates have increased over time.
D)there has been an increased preference for male child.
E)longevity has increased and the families have had fewer children.
Q2) Which of the following reasons justifies the increase in the expenditure on prescription drugs in the U.S.?
A)Lack of sufficient investment in research and development of new drugs
B)Proper functioning of the Medicare and Medicaid programs
C)Insufficient supply of prescription drugs leading to a shortage
D)Increasing returns to scale experienced by the drug manufacturers
E)Decrease in the time required to introduce a new drug into the market
Q3) The social security tax proceeds are often used to purchase government bonds.
A)True
B)False
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Page 20
Chapter 19: Income Distribution,Poverty and Government Policy
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115 Verified Questions
115 Flashcards
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Sample Questions
Q1) A Gini of 0 implies:
A)every family has equal amount of income.
B)top 10% of the families appropriate almost 100% of the total income.
C)bottom 90% of the families have only 10% of the total income.
D)bottom 20% of the families have 80% of the total income.
E)only 1 family appropriates the entire national income.
Q2) Which of the following results from the market system of resource allocation?
A)Equitable distribution of resources
B)High opportunity cost of production
C)Excess supply of goods and services resulting in decreased profits
D)Unequal distribution of income and wealth
E)Allocation of the goods and services to them who need them the most
Q3) The programs which transfer income from the richer nations to the poorer nations are referred to as:
A)transfer payments.
B)foreign aid.
C)foreign portfolio investment.
D)outsourcing and offshoring.
E)external borrowing.
Page 21
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Chapter 20: World Trade Equilibrium
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112 Flashcards
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Sample Questions
Q1) According to Table 20.5,the international equilibrium price of computers is:
A)$2,000.
B)$1,600.
C)$1,800.
D)$1,400.
E)$1,200.
Q2) According to Table 20.1,the opportunity cost of producing wheat in India equals:
A)half a unit of cloth.
B)one-third of a unit of cloth.
C)2 units of cloth.
D)4 units of cloth.
E)one-fourth of a unit of cloth.
Q3) According to Table 20.1,the opportunity cost of producing cloth in the U.S.equals:
A)2 units of wheat.
B)half a unit of wheat.
C)3 units of wheat.
D)one-third of a unit of wheat.
E)6 units of wheat.
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22
Chapter 21: International Trade Restrictions
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109 Flashcards
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Sample Questions
Q1) After the U.S.government had approved the feeding of hormones to U.S.beef cattle,several western European nations restricted the import of beef from the U.S.Which of the following tools of commercial policy had been put to use in this situation?
A)Tariff
B)Quota
C)Health and safety standards
D)Subsidy
E)Government procurement
Q2) Since individual consumers do not know how much of the price they pay for a commodity is due to protection,consumers rarely lobby their political representatives to eliminate protection and reduce prices.
A)True
B)False
Q3) Industries that are truly critical to the national defense should be protected from foreign competition if that is the only way to ensure their existence.
A)True
B)False
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Page 23
Chapter 22: Exchange Rates and Financial Links Between Countries
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132 Verified Questions
132 Flashcards
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Sample Questions
Q1) Demand for U.S.dollars by speculators is likely to increase if the dollar is expected to depreciate in the near future.
A)True
B)False
Q2) Assume that a country's government influences the exchange rate through active central bank intervention,with no pre-announced path.This policy is known as a(n):
A)floating exchange-rate policy.
B)managed floating exchange-rate policy.
C)fixed exchange-rate policy.
D)crawling-peg exchange-rate policy.
E)interventionist exchange-rate policy.
Q3) Refer to Figure 22.1.Assume that the initial equilibrium exchange rate is 6 pesos per real.Other things remaining equal,an increase in the number of Brazilian tourists to Mexico is most likely to:
A)keep the equilibrium exchange rate constant.
B)shift the demand curve for pesos to the right.
C)shift the supply curve of pesos to the left.
D)shift the demand curve for pesos to the left.
E)shift the supply curve of pesos to the right.
Page 24
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