124. Some economists believe that sound fiscal and monetary policy can reduce the amount of time the economy is in
the stage of the business cycle.
a. recession
b. recovery
c. repression
d. prosperity
e. trough
125. Since World War II, the average length of recessions has been
a. six months
b. eleven months
c. twenty-two months
d. three years
e. five years
126. During which phase do high unemployment rates decline and levels of income increase?
a. Repression
b. Peak
c. Recession
d. Trough
e. Recovery
127. The rivalry among businesses for sales to potential customers
a. is an unfair business practice.
b. is a necessary part of a command economy.
c. is referred to as competition.
d. is typical in a communist nation.
e. doesn’t exist in the real world.
128. For firms like Target and Walmart, competition
a. is not a factor that must be considered in a free-market economy.
b. affects smaller businesses but not large chain operations.
c. affects larger chain operations but not smaller businesses.
d. is a rivalry among businesses for sales to potential customers.
e. is a problem that has been eliminated in the twenty-first century.
129. Perfect competition is characterized by
a. many buyers and many sellers.
b. few buyers and few sellers.
c. few buyers and many sellers.
d. many buyers and few sellers.
e. a few companies that control the market.
130. is a necessary and extremely important by-product of capitalism.
a. Monopoly
b. Socialism
c. Communism
d. Competition
e. Poverty
131. As a farmer, Gary Forsythe is familiar with the economics of perfect competition. How is the price at which he
sells his corn determined?
a. It is determined by Gary because he has the product that many people want.
b. The price is determined by combining the actions of all buyers and all sellers together.
c. The price he will receive is primarily determined by the buyer at the local grain bin.
d. The government sets the price of the corn to level the playing field for everyone.
e. The price will be approximately 25 percent higher than what other farmers are selling the same corn for
because Gary is an astute businessperson.
132. If the demand for a product declines, what happens to the price of the product?
a. The price stays the same.
b. The price decreases.
c. The price increases.
d. The equilibrium price will be maintained.
e. The market price will be maintained.
133. As computers gained popularity, the typewriters decreased along with the price.
a. demand for
b. supply of
c. equilibrium of
d. productivity of
e. monopoly associated with
134. As the price of jeans rises, Levi Strauss is likely to
a. decrease production and thus decrease the supply.
b. increase production and thus increase the supply.
c. do nothing to influence the available supply of jeans.
d. discontinue producing jeans in favor of a different product.
e. increase production to influence the demand for jeans.
135. A price at which the demanded quantity is equal to the produced quantity of that product is called the price.
a. market
b. customer
c. equality
d. demand
e. supply
136. Researchers just released the results of a study that shows eating fish at least four times a week dramatically
decreases adults’ risk of heart disease. What will likely result from this new information?
a. The demand for fish will decrease.
b. The supply of fish will decrease, causing a decrease in the price.
c. The demand for fish will increase at every price.
d. The demand for fish will decrease at every price.
e. The demand for fish will likely remain the same, but the market price will adjust.
137. Monopolistic competition is a market situation in which
a. similar but not identical products are available.
b. only one product is available.
c. several identical products are available.
d. the same price is charged for all products.
e. the government regulates prices.
138. is the process of developing and promoting the differences between one‘s products and other similar
products.
a. Advertising
b. Monopolistic competition
c. Product differentiation
d. Branding
e. Goods distinction
139. The maker of Hanes pantyhose attempts to set its product apart from the competition. As a result, the company
obtained some limited control over the price of its product. Achieving price control in this manner is known as
a. advertising.
b. distributional efficiency.
c. low-cost production.
d. niche marketing.
e. product differentiation.
140. Although all casual clothing ultimately provides the same purpose, companies such as The Gap strive to make their
brand seem unique from the many other brands available on the market. The market for casual clothing can best be
characterized as
a. pure competition.
b. monopolistic competition.
c. an oligopoly.
d. a monopoly.
e. a natural monopoly.
141. is a market situation (or industry) in which there are few sellers.
a. Monopolistic competition
b. Pure competition
c. Monopoly
d. Oligopoly
e. Natural monopoly
142. Which of the following is not a characteristic of an oligopoly?
a. There are few sellers.
b. The seller has considerable control over price.
c. Any duplication of facilities is wasteful.
d. Sizable investments are required to enter the market.
e. The market actions of each seller can strongly affect other sellers.
143. Which of the following industries would most likely have the characteristics of an oligopoly?
a. Clothing
b. Restaurants
c. Automobiles
d. Cameras
e. Make–up
144. When General Mills and a few other firms dominate the American cereal market, this is an example of
a. pure competition.
b. monopolistic competition.
c. oligopoly.
d. natural monopoly.
e. monopoly.
145. Exxon/Mobil and Shell are two of the relatively few sellers in the oil-refining industry. Due to the tremendous
capital investment required to enter this industry, these companies are insulated significantly from the threat of new
competitive entrants and thus have considerable control over price. This market situation is referred to as a(n)
a. cartel.
b. monopoly.
c. natural monopoly.
d. oligopoly.
e. trust.
146. When Toyota experienced declining sales as a result of quality and safety issues, it began offering buyer incentives
to new-car buyers. Nearly immediately, Ford and General Motors began similar promotions. These businesses
a. represent an oligopoly in which there are few sellers, and each seller has considerable control over price.
b. represent a monopoly in which only one firm supplies a product or products.
c. are engaging in monopolistic competition in which there are many buyers as well as a relatively large number
of sellers that differentiate their products from those of competitors.
d. are engaging in pure competition, in which no single seller is powerful enough to affect prices.
e. are engaging in monopolistic competition, in which the products are very similar.
147. A market or industry with only one seller is referred to as
a. a limited command system.
b. a monopoly.
c. an oligopoly.
d. monopolistic competition.
e. a perfect competitive market.
148. If all leading corporations in the soft-drink industry merged, this would
a. encourage pure competition.
b. encourage monopolistic competition.
c. lead to an oligopoly.
d. create a limited monopoly.
e. create a monopoly.
149. Public utilities are often referred to as
a. sole proprietorships.
b. monopolistic competitors.
c. monopolies.
d. oligopolies.
e. socialistic.
150. What must a monopoly, such as a public utility, account for when setting its prices?
a. A monopoly, because it has no competitors, can set prices as high as it likes.
b. A monopoly must consider customer demand, and then set prices at the most profitable level.
c. A monopoly must take into account what its top competitors are charging for the same product or service.
d. A monopoly has no say in what prices it will charge because the government sets the prices for all
monopolistic industries.
e. A monopoly must look at the importance of each client, and then determine what respective rate each will be
charged.
151. Bowflex, Inc., which manufactures total strength training systems for home use, obtained a patent on its power
rods. Bowflex has a(n) for this product.
a. monopoly
b. oligopoly
c. natural monopoly
d. limited monopoly
e. illegal monopoly
152. When Microsoft copyrighted its Windows software, it established a(n) monopoly.
a. domestic
b. international
c. legal
d. natural
e. unnatural
153. is a loose, subjective measure of how well off an individual or society is in terms of obtaining want-satisfying
goods and services.
a. Employment success
b. Standard of wealth
c. Standard of living
d. Economic satisfaction
e. Satisfaction economic factor
154. American Airlines traded eight 747s for twelve DC–10s owned by United Airlines. This transaction is an example
of
a. barter.
b. ancient trading.
c. the domestic system.
d. the factory system.
e. an unequal exchange of goods.
155. The system in which raw materials are distributed by entrepreneurs to homes in which family members process
those materials into finished products is referred to as
a. the factory system.
b. an apprenticeship.
c. specialization.
d. free enterprise.
e. the domestic system.
156. Randall Newman distributes rawhide to several different homes. In turn, each household produces a product such
as satchels, belts, shoes, and boots, and then Randall sells the finished goods. This represents a(n)
a. oligopoly.
b. domestic system.
c. system of specialization.
d. factory system.
e. barter system.
157. The use of the factory system in the United States helped to usher in the
a. colonial period.
b. Industrial Revolution.
c. Great Depression.
d. Renaissance.
e. twentieth century.
158. One of Samuel Slater’s contributions to the development of American business was the use of
a. capital.
b. flexible manufacturing.
c. domestic robots.
d. the factory system.
e. the domestic system.
159. The separation of a manufacturing process into distinct tasks and the assignment of different tasks to different
individuals is called
a. specialization.
b. entrepreneurship.
c. free market.
d. barter.
e. factory manufacturing.
160. The Hamel family owns and operates an interior decorating business. Greg installs hardwood floors and chair rails;
Stephanie reupholsters furniture and takes care of the finances; Ryan designs and makes draperies and pillows; and
Allison coordinates the overall color, look, and design. The process the Hamel family uses to run its business is
a. specialization.
b. division of service.
c. the factory system.
d. the domestic system.
e. the barter system.
161. The purpose of specialization is to
a. reduce productivity.
b. increase the efficiency of industrial workers.
c. boost the morale of an employee because he or she is special.
d. relieve boredom.
e. make the nature of the work more general.
162. Which of the following is not a characteristic of the Great Depression?
a. Stock prices decreased.
b. It was a period of misery and human suffering.
c. There was a near collapse of the nation’s economy.
d. The government became less involved in business activities.
e. People lost faith in business and its ability to satisfy society‘s needs.
163. When did the U.S. government become more deeply involved in business than it had been previously?
a. In the early 1920s
b. After Franklin D. Roosevelt became president
c. After the Vietnam War
d. During the social responsibility movement during the 1960s
e. After the Korean War