Test bank for business a changing world 5th canadian edition by ferrell

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Test Bank for Business A Changing World 5th Canadian Edition by Ferrell
Full file at />This chapter has 101 questions.

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Multiple Choice Questions - (58)

Difficulty: Easy - (39)

True/False Questions - (37)

Difficulty: Hard - (7)

Essay Questions - (6)

Difficulty: Medium - (55)

Odd Numbered - (51)

Learning Objective: 01-01 Define basic concepts such as business; product; and profit. - (11)

Even Numbered - (50)
Accessibility: Keyboard
Navigation - (94)
Bloom's: Analysis - (2)

Learning Objective: 01-02 Identify the main participants and activities of business; and explain
why studying business is important. - (14)
Learning Objective: 01-03 Define economics and compare the four types of economic
systems. - (24)
Learning Objective: 01-04 Describe the role of supply; demand; and competition in a freeenterprise system. - (19)

Bloom's: Application - (7)
Bloom's: Comprehension - (27)

Learning Objective: 01-05 Specify why and how the health of the economy is measured. - (18)
Learning Objective: 01-06 Trace the evolution of the Canadian economy; and discuss the role of
the entrepreneur in the economy. - (15)

Bloom's: Knowledge - (65)

1. Products have tangible attributes only.
True
→ False
Products can also be a service which has intangible attributes.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 01-01 Define basic concepts such as business;
True / False Question

product; and profit.
2. The goal of business activities is to earn a profit.
→ True
False
Without profit, businesses will go out of business.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 01-01 Define basic concepts such as business;
True / False Question
product; and profit.
3. Non-profit organizations such as the Canadian Cancer Society do not engage in
management, marketing, or finance activities.
True
→ False
Non-profit organizations do not accumulate profits but they do provide goods and
services to consumers.
True / False Question

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Full file at />Accessibility: Keyboard Navigation
Bloom's: Comprehension
Difficulty: Medium
Learning Objective: 01-01 Define basic concepts such as business;
product; and profit.

4. Profit is what it costs to make and sell a product.
True
→ False
Profit is the difference between what it costs to make and sell a product and what a
customer pays for it.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 01-01 Define basic concepts such as business;
True / False Question
product; and profit.
5. Businesses have the right to keep and use their profits as they choose, without
limitations.
True
→ False
Within legal limitations, businesses have the right to keep and use their profits as
they choose.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 01-01 Define basic concepts such as business;
True / False Question
product; and profit.
6. Finance is concerned with obtaining money and using it effectively.
→ True
False
Financial resources must be managed effectively for the business to succeed.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Easy

Learning Objective: 01-02 Identify the main participants and
activities of business; and explain why studying business is
True / False Question
important.
7. Owners have little responsibility to provide funds for the operation of the business.
True
→ False
The primary responsibility of the owners is to provide financial resources for the

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Full file at />operation of the business.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 01-02 Identify the main participants and
activities of business; and explain why studying business is
True / False Question
important.
8. Managers coordinate resources to achieve organizational objectives.
→ True
False
Managers coordinate, organize, and motivate employees to achieve the business
goals.
Accessibility: Keyboard Navigation
Bloom's: Knowledge

Difficulty: Easy
Learning Objective: 01-02 Identify the main participants and
activities of business; and explain why studying business is
True / False Question
important.
9. The focus of all marketing activities is customer satisfaction.
→ True
False
Marketing includes all the activities designed to provide goods and services that
satisfy customer's needs and wants.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 01-02 Identify the main participants and
activities of business; and explain why studying business is
True / False Question
important.
10. Owners always manage their businesses themselves.
True
→ False
Owners can manage the business themselves or hire employees to accomplish this
task.

True / False Question
11.

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Accessibility: Keyboard Navigation
Bloom's: Comprehension
Difficulty: Medium

Learning Objective: 01-02 Identify the main participants and
activities of business; and explain why studying business is
important.


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Full file at />Studying business will help you develop skills to employ in a future career, if that
career takes place in the country where you studied business topics.
True
→ False
Studying business can help in students in careers both domestically and
internationally, public and private, profit and non-profit.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 01-02 Identify the main participants and
activities of business; and explain why studying business is
True / False Question
important.
12. A central issue of economics is how to fulfill consumers' unlimited demand for goods
and services in a world with limited resources.
→ True
False
Economics is the study of how resources are distributed for the production of goods
and services.
Accessibility: Keyboard Navigation
Bloom's: Knowledge

Difficulty: Medium
Learning Objective: 01-03 Define economics and compare the four
True / False Question
types of economic systems.
13. Natural resources include land, minerals, water, and other gifts of nature which are
not made by humans.
→ True
False
Canada has an abundance of fresh water, large forest areas, and a variety of minerals
including nickel, copper, and uranium.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 01-03 Define economics and compare the four
True / False Question
types of economic systems.
14. Capitalism is an economic system in which the government owns and operates basic
industries while individuals own most other businesses.
True
→ False
Socialism is an economic system in which the government owns and operates basic
industries while individuals own most other businesses.

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Full file at />True / False Question

Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 01-03 Define economics and compare the four
types of economic systems.
15. Most socialist nations are democratic.
→ True
False
Most socialist nations recognize basic individual freedoms such as voting for
government officials.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 01-03 Define economics and compare the four
True / False Question
types of economic systems.
16. Human resources refer only to the mental abilities of people used to produce goods
and services; it is synonymous with knowledge.
True
→ False
Human resources includes both the physical and mental abilities of people in
producing goods and services. It is not just the knowledge or mental ability but also
includes the physical efforts of labour as well.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 01-03 Define economics and compare the four
True / False Question
types of economic systems.

17. Demand is the quantity of goods and services that consumers are willing to buy at
different prices at a specific time.
→ True
False
Usually, as prices decrease, consumers are willing to buy more of a good or service.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 01-04 Describe the role of supply; demand;
True / False Question
and competition in a free-enterprise system.
18. The equilibrium price is represented by the point where a product's supply and
demand curves intersect.
→ True
False

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Full file at />The price at which the number of products that businesses are willing to supply is
equal to the amount of products that consumers are willing to buy at a specific point
in time is the equilibrium price.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 01-04 Describe the role of supply; demand;
True / False Question

and competition in a free-enterprise system.
19. Monopolistic competition exists when there is only one producer of a product in a
given market.
True
→ False
Monopolistic competition exists when there are fewer businesses than in a purecompetition environment and the differences among the goods are small.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 01-04 Describe the role of supply; demand;
True / False Question
and competition in a free-enterprise system.
20. An oligopoly exists when there are many small businesses selling one standardized
product.
True
→ False
An oligopoly exists when there are very few businesses selling a product.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 01-04 Describe the role of supply; demand;
True / False Question
and competition in a free-enterprise system.
21. A product's equilibrium price is constantly changing in response to changes in
economic conditions, availability of resources, and degree of competition.
→ True
False
Changing the price alters the supply curve, and a new equilibrium price results. This
is an on-going process, with supply and demand constantly changing in response to
changes in economic conditions, availability of resources, and degree of competition.

True / False Question

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Accessibility: Keyboard Navigation
Bloom's: Comprehension
Difficulty: Hard


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Full file at />Learning Objective: 01-04 Describe the role of supply; demand;
and competition in a free-enterprise system.
22. Economic expansion occurs when an economy is growing and people are spending
more money.
→ True
False
When people spend more money, it stimulates the production of goods and services
which in turn stimulates employment.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 01-05 Specify why and how the health of the
True / False Question
economy is measured.
23. The standard of living rises because people have less money to spend.
True
→ False
The standard of living rises because people have more money to spend.

Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 01-05 Specify why and how the health of the
True / False Question
economy is measured.
24. Inflation is a condition characterized by falling prices.
True
→ False
Inflation describes the situation in which there is a sustained and persistent increase
in the general level of prices of goods and services.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 01-05 Specify why and how the health of the
True / False Question
economy is measured.
25. A severe recession may turn into a depression.
→ True
False
A depression has very high unemployment, very low consumer spending and
business output is sharply reduced.
True / False Question

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Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Easy

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Full file at />Learning Objective: 01-05 Specify why and how the health of the
economy is measured.
26. During a recession, unemployment is unusually low.
True
→ False
A recession is characterized by a decline in production, rising unemployment, and
declining income.
Accessibility: Keyboard Navigation
Bloom's: Comprehension
Difficulty: Medium
Learning Objective: 01-05 Specify why and how the health of the
True / False Question
economy is measured.
27. Gross domestic product is the sum of all goods and services produced in a country
during a year.
→ True
False
GDP is a measurement that countries use to measure their state of economies.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 01-05 Specify why and how the health of the
True / False Question
economy is measured.
28. Since 1997, it has been common policy for the government of Canada to run large
budget deficits.

True
→ False
Since 1997, the Canadian government has made great efforts to reverse the trend of
budget deficits. The efforts to accumulate large budget surpluses have been quite
successful until the recession in 2008-2009.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 01-05 Specify why and how the health of the
True / False Question
economy is measured.
29. When a nation collects more from taxes than it spends, it has a budget deficit.
True
→ False
The relationship between its spending and income (from taxes) determines if a
country has a budget deficit, surplus, or balanced budget.
True / False Question

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Full file at />Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 01-05 Specify why and how the health of the
economy is measured.
30. Industrialization mostly occurred in Central Canada.

→ True
False
Industrialization was not as widespread in Canada as the United States and mostly
occurred in Central Canada.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 01-06 Trace the evolution of the Canadian
True / False Question economy; and discuss the role of the entrepreneur in the economy.
31. The Canadian Pacific Railway linked Canada from north to south.
True
→ False
The Canadian Pacific Railway linked Canada from coast to coast.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 01-06 Trace the evolution of the Canadian
True / False Question economy; and discuss the role of the entrepreneur in the economy.
32. Advertising first made consumers aware of differences in products and prices in the
marketing economy.
→ True
False
Following the manufacturing economy, businesses became more concerned with the
needs of the consumer and entered the marketing economy.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 01-06 Trace the evolution of the Canadian
True / False Question economy; and discuss the role of the entrepreneur in the economy.
33. Entrepreneurs risk their wealth, time, and effort to develop for profit an innovative

product or way of doing something.
→ True
False
The Irving Group and Loblaws are great examples of entrepreneurs starting Canadian

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Full file at />companies.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 01-06 Trace the evolution of the Canadian
True / False Question economy; and discuss the role of the entrepreneur in the economy.
34. Entrepreneurship is essential to a free-enterprise system.
→ True
False
It is a growing interest as people are attracted to being their own boss.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 01-06 Trace the evolution of the Canadian
True / False Question economy; and discuss the role of the entrepreneur in the economy.
35. In a free-market system, the government regulates business.
True
→ False
In a free-market system, competition, supply, and demand determine which goods

and services are produced.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 01-03 Define economics and compare the four
True / False Question
types of economic systems.
36. Free-market capitalism and laissez-faire capitalism are essentially the same thing.
→ True
False
Government does not interfere in a free-market or laissez-faire society.
Accessibility: Keyboard Navigation
Bloom's: Comprehension
Difficulty: Medium
Learning Objective: 01-03 Define economics and compare the four
True / False Question
types of economic systems.
37. Society demands ethical and socially responsible business behaviour towards
customers and investors only. There seems to be less of a concern for other
stakeholder groups including government regulators and the environment.
True
→ False
Society is increasingly demanding that businesspeople behave ethically towards all

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Full file at />stakeholder groups, including the environment, communities, suppliers, and
government regulators.
Accessibility: Keyboard Navigation
Bloom's: Comprehension
Difficulty: Medium
Learning Objective: 01-06 Trace the evolution of the Canadian
True / False Question economy; and discuss the role of the entrepreneur in the economy.
38. Businesses differ from non-profit organizations in that a business's focus is on
price.
goods.
→ profits.
organization.
plans.
Businesses accumulate profits, non-profit organizations do not.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 01-01 Define basic concepts such as
Multiple Choice Question
business; product; and profit.
39. When purchasing a product, the consumer is actually buying its anticipated benefits
and the _________ it brings.
→ satisfaction.
price.
costs.
productivity.
form.
Products are bought to satisfy a perceived need such as buying a Big Mac to satisfy
hunger.
Accessibility: Keyboard Navigation

Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 01-01 Define basic concepts such as
Multiple Choice Question
business; product; and profit.
40. If a business is to be successful in the long run, it must treat its customers,
employees, and community with social _______.
meetings
→ responsibility
agendas
insight
interests

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Full file at />Stakeholders have a stake in the success and outcomes of businesses, therefore a
business must act responsibility with its stakeholders.
Accessibility: Keyboard Navigation
Bloom's: Comprehension
Difficulty: Easy
Learning Objective: 01-01 Define basic concepts such as
Multiple Choice Question
business; product; and profit.
41. Which of the following is not a product?
A Mac personal computer
A veterinarian's treatment of a pet's injuries

A lawyer's advice in a divorce case
→ Profits earned by businesses
A checkup by a doctor
Business needs a product or service to make a profit but it is not a product rather it is
a financial result. A checkup by a doctor is considered a service.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 01-01 Define basic concepts such as
Multiple Choice Question
business; product; and profit.
42. The goal of business is to earn
respect.
resources.
→ a profit.
responsibility.
independence.
If a business does not earn a profit, it will go out of business.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 01-01 Define basic concepts such as
Multiple Choice Question
business; product; and profit.
43. The functions of organizing, staffing, planning, and controlling are most closely
associated with __________.
employees
customers
→ managers
stockholders

accountants

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Full file at />Managers plan, organize, staff, and control the tasks required to carry out the work of
the company or non-profit organization.
Accessibility: Keyboard Navigation
Bloom's: Comprehension
Difficulty: Easy
Learning Objective: 01-02 Identify the main participants and
activities of business; and explain why studying business is
Multiple Choice Question
important.
44. Which of the following functions involves activities designed to provide goods and
services that fulfill needs and wants of consumers?
Accounting
Engineering
Finance
Production
→ Marketing
Marketing includes all the activities designed to provide goods and services that
satisfy consumers' needs and wants.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 01-02 Identify the main participants and

activities of business; and explain why studying business is
Multiple Choice Question
important.
45. Advertising, personal selling, coupons, and sweepstakes are forms of ____.
publicity
→ promotion
marketing research
management activities
the marketing mix
Marketers use promotion to communicate the benefits of their products to
consumers.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 01-02 Identify the main participants and
activities of business; and explain why studying business is
Multiple Choice Question
important.
46. One of the best known Canadian marketing initiatives of all time is:
The Air Miles Program

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Full file at />→

Tim Hortons' "Roll up the Rim to Win"

Petro-Points
HBC's reward program
President's Choice points

Tim Hortons' executive Ron Buist, in partnership with the previous owner Ron
Joyce, came up with the simple idea of using the company's name and logo as a
marketing tool.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 01-02 Identify the main participants and
activities of business; and explain why studying business is
Multiple Choice Question
important.
47. When a business fails or does not make a profit, _______ have the most to lose.
customers
workers
managers
→ owners
consumers
Owners are responsible to provide financial resources for business operations and
may have to borrow or invest their own money during start-up.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 01-02 Identify the main participants and
activities of business; and explain why studying business is
Multiple Choice Question
important.
48. The function concerned with obtaining and managing money and using it effectively

is called:
management.
marketing.
→ finance.
production and operations.
personnel.
Finance refers to all activities concerned with obtaining money and using it
effectively.
Multiple Choice Question

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Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Easy


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Full file at />Learning Objective: 01-02 Identify the main participants and
activities of business; and explain why studying business is
important.
49. The group of people to whom management activities most apply is
consumers.
owners.
bankers.
government regulators.
→ employees.
Managers coordinate, organize, and motivate employees to achieve the business

goals.
Accessibility: Keyboard Navigation
Bloom's: Comprehension
Difficulty: Medium
Learning Objective: 01-02 Identify the main participants and
activities of business; and explain why studying business is
Multiple Choice Question
important.
50. All the following are factors of production used to make goods and services except:
natural resources.
human resources.
→ customers.
capital.
financial resources.
Customers consume goods and services.
Accessibility: Keyboard Navigation
Bloom's: Comprehension
Difficulty: Medium
Learning Objective: 01-03 Define economics and compare the
Multiple Choice Question
four types of economic systems.
51. All of the following are examples of natural resources, except:
forests.
human mental talent.
→ minerals.
nickel.
fisheries.
Human mental and physical talent are considered a human resource.
Multiple Choice Question

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Accessibility: Keyboard Navigation
Bloom's: Comprehension
Difficulty: Medium


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Full file at />Learning Objective: 01-03 Define economics and compare the
four types of economic systems.
52. Factors of production are:
→ resources used to produce goods and services.
fixed resources.
taxes.
seldom in demand.
free.
Factors of production are natural, human, and financial resources.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 01-03 Define economics and compare the
Multiple Choice Question
four types of economic systems.
53. Resources may be
services.
ideas.
machines.
→ human.

concepts.
Resources are natural, human, and financial.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 01-03 Define economics and compare the
Multiple Choice Question
four types of economic systems.
54. Which of the following questions are addressed by all economic systems?
What goods and services should be produced?
How much of each good and service should be produced?
Who will produce the goods?
How should the goods and services be distributed?
→ All of the answers are correct.
The way in which an economic system addresses the questions A through D,
determines the type of economic system.
Accessibility: Keyboard Navigation
Bloom's: Comprehension
Difficulty: Medium
Learning Objective: 01-03 Define economics and compare the
Multiple Choice Question
four types of economic systems.

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Full file at />55. All of the following are true in a communist economy except

the means of production are owned by the government.
the government chooses what will be produced.
the government decides how the goods will be produced.
supply is determined by central government planning.
→ consumers have a wide choice of goods and services.
Consumers have a limited choice in goods and services and prices are usually high.
Accessibility: Keyboard Navigation
Bloom's: Comprehension
Difficulty: Medium
Learning Objective: 01-03 Define economics and compare the
Multiple Choice Question
four types of economic systems.
56. Communist societies
→ appear to be efficient and equitable, at least in theory.
have a high standard of living.
seldom have consumer shortages.
have only one class of people.
do not spend much on defense.
Communist societies close the gap between rich and poor, but on the contrary, have a
low standard of living, experience consumer shortages, high prices, and little
freedom.
Accessibility: Keyboard Navigation
Bloom's: Comprehension
Difficulty: Hard
Learning Objective: 01-03 Define economics and compare the
Multiple Choice Question
four types of economic systems.
57. Socialism
allows only private ownership of business.
allows only government ownership of the factors of production.

→ has government ownership of basic industries.
is becoming more popular.
all of the answers are correct.
In a socialist system, the government owns and operates basic industries and
individuals own most businesses.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 01-03 Define economics and compare the
Multiple Choice Question
four types of economic systems.

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Full file at />58. Socialist economies praise their egalitarianism, which means income and social
services are distributed
to the elite only.
to the poor only.
→ equally.
unequally.
to the homeless.
Socialist economies equally distribute income and social services.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 01-03 Define economics and compare the

Multiple Choice Question
four types of economic systems.
59. Under a capitalist system, goods and services provided are determined by all of the
following except
competition.
supply.
consumer demand.
market forces.
→ businesses owned by the government.
Competition, supply, and demand determine which goods and services are produced,
how they are produced, and how they are distributed in a capitalistic society.
Accessibility: Keyboard Navigation
Bloom's: Comprehension
Difficulty: Medium
Learning Objective: 01-03 Define economics and compare the
Multiple Choice Question
four types of economic systems.
60. The difference between pure capitalism and modified capitalism is that under
→ pure capitalism there is less government regulation.
modified capitalism there is less government regulation.
pure capitalism there is more government regulation.
either form of capitalism, government regulation is equal.
none of the answers is correct.
In a pure capitalism, all decisions are made without government intervention and in a
modified capitalism, government intervenes on some level.
Multiple Choice Question

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Accessibility: Keyboard Navigation
Bloom's: Knowledge

Difficulty: Medium


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Full file at />Learning Objective: 01-03 Define economics and compare the
four types of economic systems.
61. Most economic systems
exist in a pure form.
→ exist in a mixed form.
are ineffective.
create revolutions.
give individuals freedom.
No country practises a pure economic form but have elements from more than one
economic system.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 01-03 Define economics and compare the
Multiple Choice Question
four types of economic systems.
62. Private property, profits, independent business decisions, and freedom of choice are
rights associated with
socialism.
→ free enterprise.
communism.
egalitarianism.
humanitarianism.

Free enterprise necessitates these four rights in order for the system to work.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 01-03 Define economics and compare the
Multiple Choice Question
four types of economic systems.
63. Which of the following systems has the highest degree of competition?
→ Communism
Socialism
Pure capitalism
Modified capitalism
Mixed economy
In theory, pure capitalism has no government intervention but no pure form of an
economic system exists in practice.
Multiple Choice Question

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Accessibility: Keyboard Navigation
Bloom's: Comprehension
Difficulty: Hard


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Full file at />Learning Objective: 01-03 Define economics and compare the
four types of economic systems.
64. In which economic system(s) are basic services provided by the central government?

→ Communism and socialism
Capitalism and socialism
Communism and capitalism
Socialism only
Capitalism only
Both communist and socialist societies provide basic services through a centralized
government but socialist societies also recognize basic individual freedoms.
Accessibility: Keyboard Navigation
Bloom's: Analysis
Difficulty: Medium
Learning Objective: 01-03 Define economics and compare the
Multiple Choice Question
four types of economic systems.
65. Which of the following countries best depicts a communist economic system?
→ Cuba
Canada
Russia
Poland
Hungary
Both China and Cuba are good examples of communist systems, however the
Chinese economy has grown more than any other country in the past 30 years. The
Chinese government maintains a high degree of control but significant capitalist
reforms are taking place.
Accessibility: Keyboard Navigation
Bloom's: Application
Difficulty: Medium
Learning Objective: 01-03 Define economics and compare the
Multiple Choice Question
four types of economic systems.
66. If an economist is analyzing the quantity of goods or services that businesses are

willing to sell at different prices at specific times, then the focus is on
competition.
pure competition.
demand.
→ supply.
equilibrium.
Supply is the number of goods or services that a business is willing to sell at different
prices at specific times.

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Full file at />Multiple Choice Question

Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 01-04 Describe the role of supply;
demand; and competition in a free-enterprise system.
67. Suppliers are generally willing to
lower prices below costs.
→ supply more at a higher price.
demand more at a higher price.
determine equilibrium price.
supply more at a lower price.
The potential for profits is higher when businesses sell goods at a higher price.
Accessibility: Keyboard Navigation

Bloom's: Comprehension
Difficulty: Hard
Learning Objective: 01-04 Describe the role of supply;
Multiple Choice Question
demand; and competition in a free-enterprise system.
68. When Walmart has a sale on digital cameras,
consumers won't demand more digital cameras than normal.
the store won't supply more digital cameras than it normally does.
→ consumers will demand more digital cameras.
the manufacturer will halt production of digital cameras.
consumers will demand fewer digital cameras.
Generally, when prices decrease there is an increase in the quantity demanded of that
item.
Accessibility: Keyboard Navigation
Bloom's: Application
Difficulty: Medium
Learning Objective: 01-04 Describe the role of supply;
Multiple Choice Question
demand; and competition in a free-enterprise system.
69. When Apple introduced the iPod portable digital music player, the price of and
demand for digital music players was high. As a result,
→ other suppliers introduced digital music players to meet the demand.
consumers stopped buying digital music players.
manufacturers stopped producing digital music players.
competition was not allowed to enter the market.
the equilibrium price met supply.
Although prices were high, demand was also high, and therefore businesses have the
potential for high profits.

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Full file at />Multiple Choice Question

Accessibility: Keyboard Navigation
Bloom's: Application
Difficulty: Medium
Learning Objective: 01-04 Describe the role of supply;
demand; and competition in a free-enterprise system.
70. Supply and demand may be an efficient way to distribute resources,
→ but it may not distribute resources equally among those who need them.
but it doesn't allow the poor to get rich.
although equilibrium price is determined by the government.
but it helps inefficient producers to succeed.
and it is always fair.
The forces of supply and demand prevent sellers who have to sell at higher prices
and buyers who cannot afford to buy goods at the equilibrium price from
participating in the market.
Accessibility: Keyboard Navigation
Bloom's: Comprehension
Difficulty: Hard
Learning Objective: 01-04 Describe the role of supply;
Multiple Choice Question
demand; and competition in a free-enterprise system.
71. Competition fosters efficiency because
the government regulates prices.
→ producers have to offer the best products at reasonable prices.

supply depresses prices.
all buyers have perfect knowledge.
businesses can set whatever prices they want.
If producers do not offer the best products at the most reasonable price, the business
will fail.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 01-04 Describe the role of supply;
Multiple Choice Question
demand; and competition in a free-enterprise system.
72. If Chrysler raises the prices of its new models of pickup trucks by 4 percent and
General Motors and Ford follow by raising prices by a similar amount, then this is
evidence of
a monopoly.
→ an oligopoly.
pure competition.
monopolistic competition.
supply and demand.

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Full file at />The prices charged by different firms in an oligopoly stay fairly close because a price
cut or increase by one company will trigger a similar response by another company.
Accessibility: Keyboard Navigation
Bloom's: Application

Difficulty: Medium
Learning Objective: 01-04 Describe the role of supply;
Multiple Choice Question
demand; and competition in a free-enterprise system.
73. Monopolies that function in a capitalistic economy are likely to have prices
determined by
law of supply.
law of demand.
interaction of supply and demand.
equilibrium interaction.
→ government regulation.
Government-granted monopolies, such as utility companies, are subject to
government regulated prices.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 01-04 Describe the role of supply;
Multiple Choice Question
demand; and competition in a free-enterprise system.
74. Using the supply and demand curves shown in the graph that follows, what is the
equilibrium price for soft drinks?

→

35 cents
45 cents
50 cents
55 cents
75 cents

The equilibrium price is where the supply and demand curves intersect.

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Full file at />Multiple Choice Question

Bloom's: Comprehension
Difficulty: Medium
Learning Objective: 01-04 Describe the role of supply;
demand; and competition in a free-enterprise system.
75. When businesses can promote different features of their products and consumers are
willing to pay more for products containing the features they desire, the competitive
environment is probably
pure competition.
→ monopolistic competition.
oligopoly.
monopoly.
pure capitalism.
Consumers value some features more than others and are often willing to pay higher
prices for the feature they want.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 01-04 Describe the role of supply;
Multiple Choice Question
demand; and competition in a free-enterprise system.

76. Agricultural commodities are usually sold under which competitive environment?
Monopoly
Monopolistic competition
→ Pure competition
Oligopoly
Pure capitalism
No one business sells enough agricultural commodities to influence the price and
there is no difference between the commodities offered therefore prices are
determined only by supply and demand.
Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 01-04 Describe the role of supply;
Multiple Choice Question
demand; and competition in a free-enterprise system.
77. Which competitive environment best describes the market for wheat, corn, and
cotton?
Monopoly
Monopolistic competition
→ Pure competition
Oligopoly
Pure capitalism

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Full file at />Agricultural commodities trade in a market characterized by pure competition as no

single business can influence the price and there is no difference between the
commodities offered. Prices are therefore determined only by supply and demand.
Accessibility: Keyboard Navigation
Bloom's: Application
Difficulty: Easy
Learning Objective: 01-04 Describe the role of supply;
Multiple Choice Question
demand; and competition in a free-enterprise system.
78. Which competitive environment best describes the market for Canadian air travel?
Monopoly
Monopolistic competition
→ Oligopoly
Pure competition
Pure capitalism
Canadian air travel is characterized by an oligopoly as it is dominated by Air Canada
and WestJet.
Accessibility: Keyboard Navigation
Bloom's: Application
Difficulty: Easy
Learning Objective: 01-04 Describe the role of supply;
Multiple Choice Question
demand; and competition in a free-enterprise system.
79. Economic expansion occurs when
fewer goods and services are produced than consumers demand.
→ an economy is growing and people are spending more money.
a nation's standard of living drops quickly.
employment levels decline over time.
prices begin to rise and incomes begin to fall.
When people spend more money, it stimulates the production of goods and services
which in turn stimulates employment.

Accessibility: Keyboard Navigation
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 01-05 Specify why and how the health of
Multiple Choice Question
the economy is measured.
80. Economic contraction occurs when
more goods and services are demanded by consumers.
→ spending declines and businesses cut back on production.
a nation's standard of living remains stable over time.
employment levels increase over time.

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