Econ 001 - Principles of Economics » Fall 2022 » Test 3 Ch 8-11

Need help with your exam preparation?

Existing Quiz Clients Login here
Question #1
Which of the following is a drawback of sole proprietorship?
A.   All of these.
B.   They are difficult to dissolve.
C.   It is more difficult to attract outside funding sources because the business is linked to the sole owner.
D.   The owner has limited financial liability.
Question #2
A market in which a homogenous product is sold is
A.   Perfect competition
B.   Monopoly
C.   Monopolistic competition
D.   Oligopoly
Question #3
The market called monopolistic competition is
A.   A market that produces homogeneous product
B.   A market in which firms a price takers
C.   A market that produces a differentiated products
D.   A market dominated by a large firm
Question #4
Hierarchy is the means of coordination in which independent agents adjust their actions in response to information and incentives from their immediate environment.
A.   False
B.   True
Question #5
The means of coordinating economic activity in which individuals are guided by instructions from a central authority is known as
A.   Hierarchy
B.   Cooperative
C.   Spontaneous order
D.   Partnership
Question #6
Sole proprietorships and partnerships have tax advantages over corporations.
A.   True
B.   False
Question #7
The monopolistic competitive firm will produce
A.   At the point where AFC=MC
B.   At the point where MC=P
C.   At the point where MR=MC
D.   At the point where MR=AVC
Question #8
Cartels in the United States are illegal under antitrust laws, legal in other countries.
A.   True
B.   False
Question #9
Collusion is the cooperating of firms to increase profits by increasing prices and dividing markets.
A.   True
B.   False
Question #10
Not-for-profit firms are typically organized as proprietorships.
A.   False
B.   True
Question #11
A cartel is a group of producers that act as one firm.
A.   False
B.   True
Question #12
The advantages of a corporation include
A.   It is a legal entity that cannot be separated from its owners.
B.   The owners benefit from limited liability.
C.   It is relatively easy to dissolve a corporation.
D.   There are limits to how many different people can own a part of the corporation.
Question #13
Markets coordinate economic activity through spontaneous order.
A.   False
B.   True
Question #14
Cheating among members of the cartel is a major problem.
A.   False
B.   True
Question #15
The advantage of a partnership over a sole proprietorship is
A.   They allow owners to pool their skills to create a stronger business.
B.   The owners have limited liability.
C.   They are voluntary.
D.   They have tax advantages over proprietorships.
Question #16
Patents and copyrights are legal barriers to entry.
A.   False
B.   True
Question #17
Assume the following: sales price is $9, output is 5,000 units, average total cost is $15, and average variable cost is $7.50. What should the firm do and why?
A.   Continue to produce, because price is greater than average variable cost
B.   Continue to produce because price is greater than average total cost
C.   Shut down, because of a loss of $5,000
D.   Shut down, because Average total cost is greater than price
Question #18
If the marginal revenue is below average variable cost, the firms should
A.   Increase production
B.   Shut down
C.   Increase the price
D.   Continue to operate
Question #19
The majority of firms in the U.S. are corporations.
A.   False
B.   True
Question #20
An attempt by one party to seek an advantage at the expense of another is known as
A.   Opportunism
B.   Spontaneous order
C.   Partnership
D.   Cooperative
Question #21
A partnership is a firm that is owned by two or more people who operate as a business under a voluntary legal agreement.
A.   False
B.   True
Question #22
The oligopoly market is comprised of
A.   A few larger firms
B.   Many small firms
C.   One firm
D.   Companies selling services only
Question #23
A firm, in a perfectly competitive market, produces and sells child car seats. The sales price is $600, the fixed cost are $3,000 and the variable cost are $300 per unit. What is the marginal revenue for the 10th seat sold?
A.   $480
B.   $590
C.   $625
D.   $600
Question #24
Cartels do all of the following, except
A.   collaborate as a group of firms that jointly maximize profits
B.   collaborate as a group of firms that act as one
C.   collaborate as a group of firms that limit output
D.   collaborate as a group of firms that act without collusion
Question #25
Cartel have problems enforcing output quotas on the members.
A.   True
B.   False
Question #26
If the marginal revenue is below average variable cost, the firms should
A.   Shut down
B.   Increase the price
C.   Continue to operate
D.   Increase production
Question #27
Assume the following: sales price is $9, output is 5,000 units, average total cost is $15, and average variable cost is $7.50. What should the firm do and why?
A.   Continue to produce because price is greater than average total cost
B.   Continue to produce, because price is greater than average variable cost
C.   Shut down, because of a loss of $5,000
D.   Shut down, because Average total cost is greater than price
Question #28
Which of the following is a drawback of sole proprietorship?
A.   They are difficult to dissolve.
B.   All of these.
C.   The owner has limited financial liability.
D.   It is more difficult to attract outside funding sources because the business is linked to the sole owner.
Question #29
Cartel have problems enforcing output quotas on the members.
A.   False
B.   True

Need help with your exam preparation?

Existing Quiz Clients Login here