Question 1

If a competitive industry is neither expanding nor contracting, we would expect

Accepted Answer

A)  total revenue to be zero.
B)  economic profits to be zero.
C)  total opportunity cost to be zero.
D)  more resources to flow to that industry.E) A) and D)
F) C) and D)

Question 2

Suppose a firm can produce 70 units of a product, Zenia, by combining labor, land, capital, and entrepreneurial ability, as in the four alternative techniques shown in the table below. Assume further that the firm can hire labor at $3 per unit, land at $3 per unit, capital at $6 per unit, and entrepreneurship at $9 per unit.  Refer to the provided table, and suppose that the firm uses production technique D. If each of the 70 units of Zenia that are produced sells for $1 apiece, then how much will be the total profits of the firm from 70 units of Zenia?

Accepted Answer

A)  $70
B)  $57
C)  $13
D)  $83E) B) and C)
F) A) and D)

Question 3

Refer to the diagram. Arrows (3) and (4) represent

Accepted Answer

A)  goods and services, respectively.
B)  incomes and consumer expenditures, respectively.
C)  resources and goods, respectively.
D)  consumer expenditures and income, respectively.E) B) and C)
F) A) and B)

Question 4

A characteristic of the market system is

Accepted Answer

A)  extensive use of direct or manual methods of production.
B)  a focus on labor, as opposed to capital resources.
C)  reliance on the use of capital goods in indirect modes of production.
D)  avoidance of producing goods that do not satisfy consumer wants directly.E) A) and D)
F) All of the above

Question 5

Having a high fixed salary is what motivates entrepreneurs to make prudent decisions in dealing with business risk.

Accepted Answer

A) True 
 B)False

Question 6

Discuss the benefits of restricting business risk to the owners.

Accepted Answer

Many people deeply dislike risk and woul...

Question 7

The concept of consumer sovereignty refers to the situation where consumers have the right to vote for the board of directors of large corporations.

Accepted Answer

A) True 
 B)False

Exam 2: The Market System and the Circular Flow

Having a high fixed salary is what motivates entrepreneurs to make prudent decisions in dealing with business risk.

Correct Answer
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A characteristic of the market system is

Correct Answer
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Refer to the diagram. Arrows (3) and (4) represent

Correct Answer
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The concept of consumer sovereignty refers to the situation where consumers have the right to vote for the board of directors of large corporations.

Correct Answer
verified

Correct Answer
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Discuss the benefits of restricting business risk to the owners.

Correct Answer
verified
Many people deeply dislike risk and woul...
View Answer

If a competitive industry is neither expanding nor contracting, we would expect

Correct Answer
verified

Exam 2: The Market System and the Circular Flow

Having a high fixed salary is what motivates entrepreneurs to make prudent decisions in dealing with business risk.

Correct AnswerverifiedShow Answer

A characteristic of the market system is

Correct AnswerverifiedShow Answer

Refer to the diagram. Arrows (3) and (4) represent

Correct AnswerverifiedShow Answer

The concept of consumer sovereignty refers to the situation where consumers have the right to vote for the board of directors of large corporations.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Discuss the benefits of restricting business risk to the owners.

Correct AnswerverifiedMany people deeply dislike risk and woul...View AnswerShow Answer

If a competitive industry is neither expanding nor contracting, we would expect

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Many people deeply dislike risk and woul...
View Answer

Correct Answer
verified