Deck 8: Economic Environment of Business

Question 1

Form utility usually applies only to services and not to goods.

Answer 1

False

Question 2

Economic utility is one of the four types of utility that satisfy wants.

Answer 2

False

Question 3

Selling snow tires to a customer during the first snowstorm of the season is an example of providing time utility.

Answer 3

True

Question 4

Entrepreneurship is a factor of production.

Question 5

If a country did not produce any capital goods, it could not produce many consumer goods.

Question 6

Capital goods directly satisfy human wants.

Question 7

The availability of natural resources, labor, and capital goods are all that is needed to produce goods.

Question 8

Economists include government as a factor of production.

Question 9

When productive resources are used for capital formation, fewer consumer goods are produced.

Question 10

The United States has adequate resources to satisfy all the wants of all its people.

Question 11

Countries with a command economy are often dictatorships.

Question 12

Privatization occurs when a government transfers to a business its authority to provide a good or a service.

Question 13

Communist countries place heavy emphasis on capital formation.

Question 14

One advantage of communism for managers in a communist country is their freedom to decide what to produce.

Question 15

The average profit earned by a business today is about 5 percent of total receipts.

Question 16

The primary incentive for a business to produce goods or services in the U.S.is profit.

Question 17

Demand is represented by wanting an expensive leather jacket without having the money to buy it.

Question 18

The demand is low and supply is high for unskilled workers in most age groups.

Question 19

Decreased production and increased unemployment occur during recessions.

Question 20

Satisfying wants involves four types of utility: time, place, possession, and

A) economy
B) capital
C) form
D) labor

Question 21

Producing omelette pans with nonstick coating addresses which type of utility?

A) form
B) place
C) time
D) possession

Question 22

Which statement is true about capital goods?

A) They increase production costs.
B) They increase the production of goods.
C) They decrease the productivity of labor.
D) They decrease the productivity of management.

Question 23

In an increasingly technological world, the need for human capital

A) has decreased
B) is unaffected
C) has increased
D) no longer exists

Question 24

All of the following are basic features of capitalism except

A) private property ownership
B) business competition
C) government control over wages
D) right to make a profit

Question 25

Steel that is used to produce tools and machinery is classified as a

A) consumer good
B) capital good
C) market good
D) production good

Question 26

Developing nations must generally use a larger portion of their productive resources for

A) capital formation
B) production of consumer goods
C) production of consumer services
D) marketing

Question 27

In which type of economy does a central planning authority determine what, how, and for whom goods and services are produced?

A) capital
B) command
C) market
D) mixed

Question 28

Individual citizens own most of the factors of production in a

A) command economy
B) mixed economy
C) capital economy
D) market economy

Question 29

What happens when a good or service is privatized?

A) Costs increase and efficiency increases.
B) Costs increase and efficiency decreases.
C) Costs decrease and efficiency decreases.
D) Costs decrease and efficiency increases.

Question 30

In which political-economy system does the government have extensive control over the allocation of some resources but little control over distribution?

A) communism
B) socialism
C) capitalism
D) mixed

Question 31

The right to own property is not a feature of

A) traditional capitalism
B) mixed economies
C) pure communism
D) Western European socialism

Question 32

Approximately what percentage of total receipts does a business use to pay its costs?

A) 95%
B) 65%
C) 35%
D) 5%

Question 33

If a business earns an average profit and has yearly receipts of approximately $500,000, how much would the owner likely earn in a year?

A) $15,000
B) $25,000
C) $35,000
D) $45,000

Question 34

Which statement is most accurate about demand?

A) If demand drops, profits drop.
B) If demand increases, profits drop.
C) If demand drops, profits increase.
D) If demand drops, profits are not affected.

Question 35

If a product is in short supply, what generally occurs?

A) The price drops.
B) The demand decreases.
C) The price rises.
D) The price is unaffected.

Question 36

A product's market price is the price at which

A) the producer makes a reasonable profit
B) consumer demand begins to drop
C) the producer sells at a manageable loss
D) the producer can no longer meet costs

Question 37

What normally happens during a recession?

A) Both unemployment and production increase.
B) Total demand exceeds supply.
C) Total supply exceeds demand.
D) The economic growth rate increases rapidly.

Question 38

A country's economic growth occurs when

A) population growth exceeds output
B) imports exceed exports
C) capital formation decreases
D) output exceeds population growth

Question 39

What typically occurs during a period of high inflation?

A) Total supply exceeds demand.
B) Prices rise rapidly.
C) The purchasing power of money rises.
D) Prices slowly decline.

Question 40

Match each item with the correct statement below.

-The production of capital goods.

A)business cycles
B)capital formation
C)Competition
D)CPI
E)demand
F)economic system
G)factors of production
H)human capital
I)labor
J)monopoly
K)private property
L)producer
M)supply
N)utility

Question 41

Match each item with the correct statement below.

-Accumulated knowledge and skills of human beings.

A)business cycles
B)capital formation
C)Competition
D)CPI
E)demand
F)economic system
G)factors of production
H)human capital
I)labor
J)monopoly
K)private property
L)producer
M)supply
N)utility

Question 42

Match each item with the correct statement below.

-The human effort expended to produce goods and services.

A)business cycles
B)capital formation
C)Competition
D)CPI
E)demand
F)economic system
G)factors of production
H)human capital
I)labor
J)monopoly
K)private property
L)producer
M)supply
N)utility

Question 43

Match each item with the correct statement below.

-Anyone who creates utility.

A)business cycles
B)capital formation
C)Competition
D)CPI
E)demand
F)economic system
G)factors of production
H)human capital
I)labor
J)monopoly
K)private property
L)producer
M)supply
N)utility

Question 44

Match each item with the correct statement below.

-The existence of only one seller of a product.

A)business cycles
B)capital formation
C)Competition
D)CPI
E)demand
F)economic system
G)factors of production
H)human capital
I)labor
J)monopoly
K)private property
L)producer
M)supply
N)utility

Question 45

Match each item with the correct statement below.

-The way that a country decides how to use its productive resources.

A)business cycles
B)capital formation
C)Competition
D)CPI
E)demand
F)economic system
G)factors of production
H)human capital
I)labor
J)monopoly
K)private property
L)producer
M)supply
N)utility

Question 46

Match each item with the correct statement below.

-The number of products that will be bought at a given time at a given price.

A)business cycles
B)capital formation
C)Competition
D)CPI
E)demand
F)economic system
G)factors of production
H)human capital
I)labor
J)monopoly
K)private property
L)producer
M)supply
N)utility

Question 47

Match each item with the correct statement below.

-The number of like products that will be offered for sale at a particular time at a particular price.

A)business cycles
B)capital formation
C)Competition
D)CPI
E)demand
F)economic system
G)factors of production
H)human capital
I)labor
J)monopoly
K)private property
L)producer
M)supply
N)utility

Question 48

Match each item with the correct statement below.

-Rivalry among sellers for consumers' dollars.

A)business cycles
B)capital formation
C)Competition
D)CPI
E)demand
F)economic system
G)factors of production
H)human capital
I)labor
J)monopoly
K)private property
L)producer
M)supply
N)utility

Question 49

Match each item with the correct statement below.

-A measure of the average change in prices of consumer goods and services.

A)business cycles
B)capital formation
C)Competition
D)CPI
E)demand
F)economic system
G)factors of production
H)human capital
I)labor
J)monopoly
K)private property
L)producer
M)supply
N)utility