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Introduction to Economics quiz #4

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  • Which statement best explains why there was a coin shortage during the COVID-19 pandemic?
    Reduced circulation and business closures led to a coin shortage.
  • Why does every society need to develop an economic system?
    To allocate scarce resources efficiently.
  • What are advantages of organizing economic activity inside of a firm?
    Firms can reduce transaction costs and coordinate production.
  • What represents a long-run adjustment?
    Building a new factory is a long-run adjustment.
  • Which constraint does not allow someone to create an order for a nonexistent customer?
    A database integrity constraint prevents this.
  • What is a step that economists do not take when studying the economy?
    Ignoring data is not a step economists take.
  • What type of issue is economic prosperity?
    Economic prosperity is a macroeconomic issue.
  • What is the definition of a tax?
    A tax is a compulsory payment to the government.
  • What is generally the first step in market segmentation?
    Identifying potential customer groups is the first step.
  • What is an example of a sunk cost?
    Money spent on a non-refundable deposit is a sunk cost.
  • Which of these consumers is involved in an exchange for a service?
    A person getting a haircut is exchanging for a service.
  • What is the most important source of risk from owning bonds?
    Interest rate risk is the most important source.
  • Which term refers to a company deciding where to establish its operations?
    This is called location selection.
  • Which of these is an example of a multiple products?
    A bakery selling bread, cakes, and cookies.
  • How does the quantity of money demanded vary with the interest rate?
    It varies inversely with the interest rate.
  • What are the two most important assumptions in all of economics?
    Scarcity and rational behavior are key assumptions.
  • What two principles did Adam Smith believe essential to the survival of an economy?
    Self-interest and competition.
  • How is the benefit-cost ratio defined?
    The ratio of total benefits to total costs.
  • What is true of franchising?
    Franchising allows businesses to expand using others' capital.
  • Which economic system involves little government regulation or interference?
    A market economy involves little government interference.
  • Which is the broadest definition of a market?
    A market is any place where buyers and sellers interact.
  • What is a correct statement about a mixed economy?
    A mixed economy combines private enterprise with government regulation.
  • What will be a result of businesses expanding to serve global markets?
    Businesses may increase sales and face more competition.
  • What is considered a barrier to entry into an industry?
    High start-up costs are a barrier to entry.
  • What does investment spending refer to?
    Investment spending refers to purchases of capital goods.
  • What applies to customers offering goods and services to each other on the internet?
    This is called peer-to-peer commerce.
  • Which term indicates that firms should put social commitments into place?
    Corporate social responsibility.
  • What is government revenue?
    Government revenue is money collected from taxes and fees.
  • What is the best example of a business whose goal is to earn a profit?
    A retail store selling products for profit.
  • What is an example of a market niche?
    A bakery specializing in gluten-free products.
  • What is true of markets?
    Markets facilitate exchange between buyers and sellers.
  • Which tax uses a regressive tax rate structure?
    Sales taxes are regressive.
  • What are goods?
    Goods are tangible items that satisfy wants or needs.
  • What do we mean by resources in economics?
    Resources are inputs used to produce goods and services.
  • What observation did Adam Smith make famous in his book The Wealth of Nations?
    The invisible hand guides self-interest to benefit society.
  • Which term is used for the customer segment in the introductory stage of the industry life cycle?
    Early adopters.
  • What is the primary cause of diseconomies of scale?
    Management inefficiencies cause diseconomies of scale.