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Introduction to Economics quiz #3

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  • What is the difference between vertical and horizontal integration?
    Vertical integration involves controlling supply chain stages; horizontal integration involves merging with competitors.
  • Which of these economic goals is most important in a traditional economy?
    Stability and meeting basic needs are most important.
  • What is a characteristic of a traditional economy?
    Production is based on customs and traditions.
  • What is a market economy regulated by?
    A market economy is regulated by supply and demand.
  • What was the purpose of NAFTA?
    NAFTA aimed to promote free trade between the US, Canada, and Mexico.
  • What are the four basic market structures?
    Perfect competition, monopoly, oligopoly, and monopolistic competition.
  • What is the best definition of a cost leadership strategy?
    A cost leadership strategy aims to be the lowest-cost producer in an industry.
  • What is the paradox of value?
    The paradox of value refers to the contradiction between high value of non-essentials and low value of essentials.
  • What is the definition of average variable cost?
    Average variable cost is total variable cost divided by output.
  • Which is the primary source of revenue for the federal government?
    Income taxes are the primary source of federal revenue.
  • What term describes an organization that connects users to the internet?
    An Internet Service Provider (ISP) connects users to the internet.
  • What are subjects of microeconomics?
    Consumer choices and firm behavior are subjects of microeconomics.
  • What is a defining characteristic of a market economy?
    Private ownership and voluntary exchange define a market economy.
  • What is an example of a wealth tax?
    A tax on property or net worth is a wealth tax.
  • What are two examples of economic forces within a company's general environment?
    Inflation and unemployment are economic forces.
  • Which group of people ultimately determines the products that a command economy produces?
    Government planners determine products in a command economy.
  • What explains an increase in the demand for loanable funds?
    Higher investment demand increases demand for loanable funds.
  • What does Thomas Malthus say about food supply and population control?
    Malthus argued that population growth would outpace food supply.
  • What is an organized collection of data?
    A database is an organized collection of data.
  • What is the role of the three questions of economics?
    They guide resource allocation and production decisions.
  • Is profit maximization the primary objective of a business?
    Yes, profit maximization is typically the primary objective.
  • Every economic system answers three questions: What is produced? How is it produced?
    And for whom is it produced?
  • What might lead to an expansion in the business cycle?
    Increased consumer spending and investment can lead to expansion.
  • The United States operates within what type of economic system?
    The US operates within a mixed-market economy.
  • What is one significant characteristic of fractional reserve banking?
    Banks keep only a fraction of deposits as reserves.
  • What is an example of microeconomics?
    Studying how a price change affects a single firm's sales.
  • On what are excise taxes levied?
    Excise taxes are levied on specific goods like alcohol and tobacco.
  • Which feature is characteristic of a market economy?
    Private property and voluntary exchange are characteristic.
  • What gives money its value?
    Money's value comes from government backing and public trust.
  • What are the characteristics of a traditional economy?
    Traditional economies rely on customs, traditions, and barter.
  • What determines prices in a market economy?
    Prices are determined by supply and demand.
  • What does a decreasing-cost industry experience?
    Average costs fall as industry output increases.
  • What causes business cycle fluctuations?
    Business cycles are caused by changes in aggregate demand and supply.
  • What are tasks performed by people that customers will buy to satisfy a want or need?
    These tasks are called services.
  • What is an example of a goods producing business?
    A car manufacturer is a goods producing business.
  • All other things equal, what does this phrase mean in economics?
    It means holding other variables constant to isolate effects.
  • What is an example of creative destruction?
    Smartphones replacing landline phones is creative destruction.