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Exam 2: Understanding How Economics Affects Business

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Question 141

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Kathleen's company produces computer monitors and other peripheral devices for computers.About six months ago,Kathleen began to keep track of number of hours worked,and the resulting output at her particular work site.Comparing the results,she found that the number of workers (and the hours they worked) remained relatively steady over the past six months,however,the work site's output increased significantly.This indicates that:

A) Productivity at the work site has increased.
B) The work site sold-off some of its excess inventory.
C) The company's prices have increased faster than the wages paid to workers.
D) The company should hire more workers.

E) C) and D)
F) None of the above

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Question 142

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A free-market economic system is one in which the market of buyers and sellers decides what is produced,how much is produced,and how it is distributed.

A) True
B) False

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Question 143

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Maureen is the office manager of a service company.She recently approved the installation of new computers and office equipment for all workers in her office.If Maureen's company is like most service companies,she will probably see a big jump in the productivity figures reported for workers in her office.

Which of the following people would tend to favor a socialist economy?

Fourteen years ago,Sergio noticed that a lot of people who bought personal computers did not know much about how to use them and frequently suffered system crashes and other aggravations.He decided he could earn a nice profit by starting a consulting business to help other people overcome their computer woes.Although the business struggled at first,it has experienced a good deal of success for the past five years.Sergio has many satisfied customers,and the business has grown to the point where he now employs several workers.Sergio's experience is an example of:

As you scan the national news online,you read about the BXY Utility Company's latest problems.The story describes an expansive retaining wall that collapsed during a flood last week,spewing toxic coal ash,burying homes,and causing a few fatalities.An editorial claims that the company will not be held accountable to the same standards as the asbestos companies of a few years back that paid severe fines and even went out of business due to their lack of attention to environmental clean-up.You agree with the writer because you recently studied about the various competitive markets and utility companies clearly fall under monopolistic competition.

Economists refer to a market in which a few sellers dominate the supply side as monopolistic competition.

The government of Velovia made progress in its efforts to bring rapid inflation under control.Although prices are still rising,the rate of increase has slowed considerably.This suggests that Velovia is experiencing disinflation.

As of 2012,total GDP in the United States was over $14 trillion.

Thomas Malthus was pessimistic about the ability of a society to achieve high standards of living for most of its citizens because he believed that:

One of the benefits of a free market is that:

Workers in socialist countries often get longer vacations and more social benefits than workers in free market economies.

The main goal of resource development is to find ways to:

GLAMOR GAL is a popular cosmetics company.Although it is gaining in popularity among younger women,its promotional strategy continues to focus on the shadow-free finish that it produces on almost any skin type.Due to the fact that its industry faces monopolistic competition,the company knows that it must continue to differentiate itself from the competition.

The total value of final goods and services produced within a nation's borders in a given year is known as that nation's:

Governments that were predominantly capitalistic are moving toward socialism,while governments that were predominantly socialistic are moving toward capitalism.

America's business success is largely due to an economic and social climate that allows businesses to operate freely.

When the federal government's collection of tax revenues is less than what it spends in a given year,it results in a:

A surplus currently exists for a product called widgets.In a free market system,the government must step in and buy any widgets that consumers do not buy in order to eliminate the surplus and establish equilibrium.

Adam Smith believed that since businesspeople are motivated to improve their own prosperity,their actions are unlikely to benefit society as a whole.