BackIntroduction to Economics quiz #6
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1/38BackSkip to main contentBackWhat is an objective of protectionism?
Protectionism aims to shield domestic industries. What is a general factor that contributes to the success of small businesses?
Flexibility and innovation. A form of pricing high is called what?
Premium pricing. Which items represent an implicit cost to a business owner?
Foregone income from alternative employment. Why might a natural monopoly exist?
High fixed costs and economies of scale. Which level of the global wealth pyramid represents the largest number of people?
The base level represents the largest number. Which industry is known for having the lowest barrier to entry?
Retail has low barriers to entry. Which factor is likely to make a country a more attractive location for international business?
Stable political environment. Which product characteristic is not set by R&D?
Location is not a product characteristic. What is not a source of natural market power?
Low fixed costs are not a source. Why can a small business owner make decisions quicker than a big business?
Fewer layers of management allow faster decisions. What describes economies of scope?
Producing multiple products more efficiently together. What is a simpler medium of exchange than bartering?
Money is a simpler medium of exchange. What institution do economists see as necessary for economic growth?
Stable financial institutions. When does a principal–agent problem occur?
When managers' interests differ from owners'. Which of these scenarios is not an example of a barrier to entry?
Low start-up costs are not a barrier. What is not considered economic investment?
Buying stocks is not economic investment. Which topic below best applies to microeconomics?
Consumer decision-making. What does the study of economics focus on?
Economics studies how societies allocate scarce resources. What are the functions of money?
Medium of exchange, unit of account, store of value. Suppose the government decreases taxes. What will happen to disposable income and consumer spending?
Disposable income and consumer spending will increase. Everything else equal, what does this phrase mean in economics?
It means holding other factors constant. Other things the same, what does this phrase mean in economics?
It means assuming all other variables are unchanged. Which best describes how a recession develops as demand and production decrease?
Falling demand leads to lower production and rising unemployment. Why do you think banks will try to sell you credit cards or personal loans?
Banks earn interest and fees from these products. How does the government pay for roads?
The government pays for roads using tax revenue. What can be traded in a commodities market?
Basic goods like oil, gold, and wheat. What is an example of a market economy?
The United States is an example of a market economy. Which type of trade barrier is explicitly used for political purposes?
An embargo is used for political purposes. What is a primary characteristic of commodities as an investment vehicle?
Commodities are standardized and traded in bulk. What does cost of living refer to?
Cost of living is the amount needed to cover basic expenses. Why do countries provide financial incentives?
To attract investment and stimulate economic activity. Which describes a type of tax that people pay on money they earn?
An income tax. What is the economic system in the United States?
The United States has a mixed-market economy. Which of these situations are more likely to happen in a good economy?
Job growth and rising incomes. Why do economists study the data of economic indicators?
To analyze and predict economic trends. What is an oligarchy?
An oligarchy is a government ruled by a small group. What type of economy does the United States have?
The United States has a mixed-market economy.
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