Question 1

The ________ price reflects what the consumer is willing to pay.

Accepted Answer

The market price reflects what the consumer is willing to pay.

Question 2

China's response to U.S. tariffs against them was to put tariffs on U.S. soybean exports, hurting soybean farmers in the United States significantly since China typically buys more than half of U.S. soybean shipments. This is an example of how ________ can affect markets.

Accepted Answer

This is an example of government influences affecting markets, as the tariffs imposed by China in response to U.S. tariffs are a direct action by a government that impacts the market dynamics, particularly affecting U.S. soybean farmers by reducing their exports to China.

Question 3

Grant owned a small chain of hotels in a city with much larger chains. He found he had trouble booking all his rooms because their availability sometimes got lost in the glut of information available to consumers. This is an example of how ________ can affect markets.

Accepted Answer

Incomplete information affects markets by making it difficult for consumers to find or be aware of all available options, as illustrated by Grant's hotels struggling to book all rooms due to their availability being overshadowed by larger chains.

Question 4

The former Soviet Union continually failed to anticipate and meet demands for food and housing, which led to long lines and waiting lists among citizens. This best illustrates which drawback of communism?

Accepted Answer

The failure to anticipate and meet demands for food and housing in the former Soviet Union is a classic example of the drawbacks of central planning, where a central authority makes decisions about production and distribution, often leading to inefficiencies and shortages.

Question 5

Alexei lived in Russia in the 1970s when the communist state was in control. He worked at a factory job and wasn't particularly motivated to pursue a better job, even though he hated the one he had. What is the most likely drawback to communism in this scenario?

Accepted Answer

The scenario highlights the lack of incentives as a drawback to communism, where the economic system does not motivate individuals to pursue better employment or productivity due to equal distribution of wealth and lack of personal financial incentives.

Question 6

Sven lives in Norway. Although the government owns some major industries, Sven does own and operate a small bakery. In addition, the government provides social programs for its citizens, like health insurance, social security, and pensions. Norway's economic system is

Accepted Answer

The answer of Sven lives in Norway. Although the government...

Question 7

When Billie moved from Iowa to Sweden, she was surprised how little entrepreneurism she saw. This is most likely because of which drawback of socialism?

Accepted Answer

The answer of When Billie moved from Iowa to Sweden,...

Question 8

During which phase of the business cycle does the pace of economic activity slow down and GDP falls?

Accepted Answer

During the contraction phase of the business cycle, the pace of economic activity slows down and GDP falls. This phase follows the peak and precedes the trough, marking a period of declining economic performance.

Question 9

________ is a general increase in the prices of most goods and services.

Accepted Answer

Inflation is defined as a general increase in the prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation reflects a reduction in the purchasing power per unit of money.

Question 10

The ________ is the level of joblessness among people 16 years or older actively seeking work.

Accepted Answer

The unemployment rate measures the level of joblessness among people aged 16 years or older who are actively seeking work.

Question 11

Nneka just graduated with a degree in economics. She has accepted her first job and will be responsible for researching how the price of different forms of dairy goods impacts how much people buy when grocery shopping. Nneka is most likely working in the field of

Accepted Answer

Microeconomics focuses on the actions of individuals and industries, like the dynamics between buyers and sellers, and the factors that influence the choices made by consumers. Nneka's research on how the price of dairy goods impacts consumer purchasing behavior falls squarely within the realm of microeconomics, as it deals with individual market segments and consumer responses to price changes.

Question 12

The hot new video game system is having production delays, which is limiting the number of units available for resale. How will sellers most likely react in this situation?

Accepted Answer

In a situation where a hot new video game system is experiencing production delays, leading to a limited number of units available for resale, sellers are most likely to increase prices. This is due to the basic economic principle of supply and demand. When supply is limited and demand is high, prices tend to increase.

Question 13

Tierra and Alexis opened a store last year. They sell video game consoles, games, and accessories. They have noticed that the prices for their inventory have been increasing over the course of the year. This is most likely a sign of

Accepted Answer

Inflation is characterized by a general increase in prices and fall in the purchasing value of money, which aligns with the scenario where the prices for inventory (video game consoles, games, and accessories) have been increasing over the year.

Question 14

Bedazzled headbands have become a very popular item with children in the past year. The market is flooded with them. What is most likely to happen as a result?

Accepted Answer

When the market is flooded with a product, the supply is high, which typically leads to a decrease in price as sellers compete to attract buyers.

Question 15

Giant Enterprises is preparing to install a new automated production line in its factory. Which of the factors of production does the new line best represent?

Accepted Answer

The new automated production line is an example of capital, as it represents a physical asset that the company is investing in to produce goods or services more efficiently.

Question 16

Dreamcatcher Toys is preparing for the holiday rush. It uses staffing firms and its own recruiting team to nearly double the production team each year. Which of the factors of production does the staffing increase best represent?

Accepted Answer

The staffing increase best represents human resources, as it involves the recruitment and utilization of personnel to meet the production demands.

Question 17

A'ja opened her own consulting firm last year specializing in technology training. She knows that companies in the marketplace are always looking for ways to keep their employees current with new technology, so A'ja dedicates a portion of her week to studying technology trends. She uses this information to develop new programs that will add additional value for her customers. Which of the factors of production does this best represent?

Accepted Answer

A'ja's actions of dedicating time to study technology trends and using this information to develop new programs represent the factor of production known as knowledge. This is because she is leveraging information and expertise to create value for her customers. Knowledge as a factor of production involves the application of information, innovation, and skills to improve products or services.

Question 18

Nationwide Sports specializes in sports merchandise from teams around the country. It makes the goods available in its stores located in cities throughout the United States. The cities with Nationwide stores are most likely realizing which benefit of capitalism?

Accepted Answer

Improved access to goods and services is a direct benefit of capitalism, as it encourages the distribution and availability of a wide range of products, including sports merchandise, to consumers in various locations.

Question 19

Giga Company recently implemented a new benefit for its employees. Giga will match every dollar that employees donate to charitable organizations dollar for dollar. Which benefit of capitalism does this best represent?

Accepted Answer

This represents help for the less fortunate because the company is matching donations to charitable organizations, directly contributing to social welfare and support for those in need.

Question 20

Tri-State Banking was recently found guilty of defrauding a large group of its customers. Tri-State had been adding paid services and fee-based accounts for its senior customers even if they hadn't requested them. Which drawback of capitalism does this best represent?

Accepted Answer

This scenario best represents exploitation, as Tri-State Banking took advantage of its senior customers by adding paid services and fee-based accounts without their consent, exploiting their trust and potentially their lack of understanding or oversight of their financial accounts.

Quiz 6: Accounting and Financial Statements