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Introduction to Economics quiz #5

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  • What is the best example of a market?
    A farmers' market where buyers and sellers trade goods.
  • What does microeconomics study?
    Microeconomics studies individual markets and decision-makers.
  • What is an issue related to microeconomics?
    Pricing strategies of a single firm.
  • What is a possible effect of inflation?
    Inflation reduces purchasing power.
  • Which of these is a benefit to using an indirect strategy?
    Indirect strategies can reach more customers through intermediaries.
  • What are key issues for today's business operations?
    Globalization and technological change are key issues.
  • During times of rising prices, what happens to purchasing power?
    Purchasing power decreases.
  • How does free trade tend to benefit society?
    Free trade increases efficiency and consumer choice.
  • What are the four levels of social responsibility?
    Economic, legal, ethical, and philanthropic responsibilities.
  • What is a difference between large organizations and entrepreneurial businesses?
    Large organizations have more resources; entrepreneurial businesses are more flexible.
  • What type of government policy is helpful in a recession?
    Government stimulus spending is helpful in a recession.
  • When the U.S. dollar is strong relative to other currencies, what is the effect?
    U.S. exports become more expensive, imports become cheaper.
  • Why do railroads require greater volumes of freight in order to be profitable?
    High fixed costs require large volumes for profitability.
  • Free trade is based on what principle?
    Free trade is based on comparative advantage.
  • On what principle are market economies based?
    Market economies are based on voluntary exchange.
  • What is one of the benefits of specialization in labor?
    Specialization increases productivity and efficiency.
  • What is an example of a barrier to entry that protects an inventor from rivals?
    Patents are barriers to entry.
  • What is an example of an economic indicator?
    GDP is an economic indicator.
  • What are one of the four main elements that define a market?
    Buyers and sellers are main elements.
  • Which term refers to a company that is involved in more than one activity in the value chain?
    This is called vertical integration.
  • What type of cost includes anything a buyer must give up to obtain the benefits a product provides?
    Opportunity cost.
  • Why would a firm be deterred from building a new factory by higher interest rates?
    Higher interest rates increase borrowing costs.
  • What are the two economic factors that reflect a country’s attractiveness as a market?
    Market size and growth rate.
  • An angel investor with specific industry knowledge and connections is known as?
    A strategic angel investor.
  • What kind of power might a local community use to influence a company's decisions?
    Regulatory or political power.
  • What is another term for deadweight loss?
    Excess burden.
  • What is an example of an implicit cost of production?
    Foregone salary from alternative employment.
  • What are the characteristics of first movers in a market?
    First movers can gain competitive advantages but face risks.
  • What is a method to order options by priority?
    Ranking.
  • Which industry category accounts for the fewest number of small businesses?
    Mining accounts for few small businesses.
  • All of the following are departments within a typical organization except which?
    A family department is not typical.
  • Which would be considered an investment according to economists?
    Purchasing new machinery for a factory.
  • What does the coordination problem refer to in economics?
    Difficulty in aligning actions among economic agents.
  • Usually facilitate a connection between two anonymous parties that are willing to trade?
    Markets facilitate these connections.
  • Which is a characteristic of the price of preferred stock?
    Preferred stock pays fixed dividends.
  • What two important functions does a market system perform?
    Markets allocate resources and coordinate economic activity.
  • A market economy includes which following characteristic?
    Private property rights.
  • What does the study of economics focus on?
    Societies allocate scarce resources.