SOM 122 Chapter 1 MC review (Exam 1) – Flashcards
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is a system that sanctions the private ownership of the factors of production and encourages entrepreneurship by offering profits as an incentive.
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Capitalism
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Never-Wet Basements developed a proprietary sump pump system, which it now sells to commercial and consumer buyers for a profit. In addition, the company offers discounted installation services to its customers. Referring to the above scenario, which of the following describes Never-Wet Basements?
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Business
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The executive of a national airline based in New Mexico wants to add flights to two different cities on the East Coast, but she is not sure how many seats to offer and at what prices. To better understand this relationship, which of the following should she review to BEST determine that information?
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Demand and supply schedule
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Which of the following is the BEST definition of monopolistic competition?
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A market or industry characterized by numerous buyers and relatively numerous sellers trying to differentiate their products from those of competitors
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is/are the difference between a business's revenues and its expenses.
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Profits
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Which of the following is the BEST definition of gross national product?
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The total value of all goods and services produced by a national economy within a given period regardless of where the factors of production are located
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Which of the following is the BEST definition of a natural monopoly?
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A market or industry where one company can most efficiently supply all needed goods or services
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Which of the following is the BEST definition of private enterprise?
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An economic system that allows individuals to pursue their own interests without undue government restriction
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What is the definition of real GDP?
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An adjusted GDP to account for changes in currency values and price changes
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The curve is a graph showing how many units of a product will be bought at different prices.
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demand
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Which of the following best describes an economic system?
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A nation's system for allocating its resources among its citizens
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When a buyer desires a good or service, and he has the financial means to pay for it, there is _____________ for the good or service.
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demand
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A severe economic downturn that lasts for several years is known as a(n) .
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depression
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Which of the following is the BEST definition of aggregate output?
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The total quantity of goods and services produced by an economic system during a given period
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The curve is a graph showing how many units of a product will be offered for sale at different prices.
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supply
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______________is GDP measured in current dollars or with all components valued at current prices.
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Nominal GDP
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Ten years ago, Bryan took a risk and opened a pizza restaurant in his small hometown. He has successfully operated this restaurant—the only one in town—ever since. Earlier this year, one of his former employees opened a Pizza Pie franchise just a few blocks away, in a growing section of town. According to the above scenario, Bryan's has just increased.
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competition
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____________is the principle that exchange rates are set so that the prices of similar products in different countries are about the same.
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Purchasing power parity
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Which of the following describes the pattern of expansions and contractions within an economy over the short term?
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Business cycle
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Which of the following is the BEST definition of balance of trade?
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The economic value of all the products that a country exports minus the economic value of all the products it imports
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_____________is a political system in which the government owns and operates all factors of production.
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Communism
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The owner of a local snowboard shop wants to know how many snowboards she would need to offer for sale at various price points, so you advise her to look at the
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supply curve
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Which of the following external environments would encompass a company's automatic billing system?
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Technological environment
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Which of the following describes a country that has a planned economy as its foundation but allows for some private ownership of its factors of production?
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Mixed market economy
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When a business is subject to local zoning that restricts the type of building it is allowed to construct and where it is allowed to construct it, the business is being affected by the_____________ environment.
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political-legal
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A government that wants to introduce a stimulus package in order to put more money into the economy needs to first put a(n) _______ in place.
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monetary policy
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Which of the following decisions demonstrates that an organization is being impacted by the sociocultural environment?
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A restaurant decides to replace many of the processed food items on its menu in response to younger consumers' increased demand for organic offerings.
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An increase in both GDP and GDP per capita results in a subsequent increase in an economic system's ________________.
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standard of living
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When a fisherman catches more lobster than his local seafood buyers will purchase, he is faced with a(n)
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surplus
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Which of the following is intended to limit the ups and downs of output and unemployment and to steady prices?
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Stabilization policy
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Ten years ago, Bryan took a risk and opened a pizza restaurant in his small hometown. He has successfully operated this restaurant—the only one in town—ever since. Earlier this year, one of his former employees opened a Pizza Pie franchise just a few blocks away, in a growing section of town. According to the scenario above, which of the following terms best describes Bryan?
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Entrepreneur
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A domestic company that works with suppliers or customers beyond its borders might be impacted by the ___________________ more quickly than a company that does not.
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global business environment
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An economic system experiences stability when .
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the quantity of its goods and services is increasing at approximately the same percentage that its available amount of currency is increasing
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When the money supply of a country expands but production does not, what is the likely result?
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Inflation
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If you were to consider demand and supply in terms of individual buyers and sellers, which of the following scenarios BEST indicates supply?
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Drake wants to offer grooming services at the puppy training business he started last year, and he has the proper training, licensing, equipment, and space to do so.
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A recession is BEST characterized by which of the following?
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A period of decreased aggregate output that results in the need for fewer employees
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Jayna is a scientist who conducts cancer research and helps to create new drugs for an established global pharmaceutical company. Her job requires the use of specialized microscopes that cost thousands of dollars. Referring to the scenario above, which factor of production does the microscope represent?
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Physical resource
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Jayna is a scientist who conducts cancer research and helps to create new drugs for an established global pharmaceutical company. Her job requires the use of specialized microscopes that cost thousands of dollars. Referring to the scenario above, which factor of production does Jayna herself represent?
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Labor
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Which of the following would explain why a company would ship more of its products by truck when the price of diesel fuel decreases but park those same trucks as the fuel price increases?
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Law of demand
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Which of the following is the BEST example of a shortage?
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The demand for potatoes is greater than the amount of potatoes farmers can grow
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The state of Indiana sold off the management of the toll-road system it controlled to a foreign investor in a process known as _______.
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privatization
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Which of the following statements about a market economy is TRUE?
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It aims to create shared value between businesses and customers.
