Dealing with Competition

Question 1

Free goods (no opportunity cost) from nature become economic goods (with explicit & opportunity cost) with man’s intervention to make it available to the consumers.

Answer 1

True.

Question 2

Which of the following is not an economic system:

Tradition.
Adaptive.
Market.
Command.

Answer 2

Adaptive.

Question 3

The fundamental economic decisions are: What to produce? How to produce? How much to produce? And for whom to produce?

Answer 3

True.

Question 4

The Water-Diamond Paradox states that value is in rarity/ scarcity, not in usefulness.

Answer 4

True.

Question 5

Entails that water is more useful compared to diamonds (less needed), yet diamond’s price is much higher than water.

Answer 5

Water-Diamond Paradox.

Question 6

Refers to loss of potential gain.

Answer 6

Opportunity Cost.

Question 7

Something or value you gave up to purchase the other service/good.

Answer 7

Exchange value.

Question 8

All are features of economic good except:

Man-made.
With price.
With exchange value.
No opportunity cost.

Answer 8

No opportunity cost.

Question 9

All are features of free goods except:

From nature.
No price.
With exchange value.
No opportunity cost.

Answer 9

With exchange value.

Question 10

Free goods and economic goods both have utility.

Answer 10

True.

Question 11

This market system is closely related to Capitalism. Decentralized; private ownership of resources.

Answer 11

Market.

Question 12

A pure monopoly faces little competition because of high barriers to entry, such as high initial costs, or because the company has acquired significant market influence through network effects, for instance.

Answer 12

True.

Question 13

There is pricing power within the market and only one supplier who has significant market power and determines the price of its product.

Answer 13

Pure monopoly.

Question 14

In a monopolistic competition, firms must always consider the actions of the other firms in the market when changing price.

Answer 14

True.

Question 15

A market dominated by a few suppliers. A high barrier to entry limits the number of suppliers that can compete in the market, so that the firms have considerable influence over the market price of their product.

Answer 15

Oligopoly.

Question 16

Monopolistic competition is only possible, however, when the differentiation is significant or if the suppliers are able to convince consumers that they are significant by using advertising or other methods that would convince consumers of a product’s superiority.

Answer 16

True.

Question 17

There are many firms in Pure Monopoly because there is a low barrier of entry into the business.

Answer 17

False.

Question 18

Suppliers try to differentiate their products as being better so that they can justify higher prices or to have a larger market share than the competition.

Answer 18

Monopolistic competition.

Question 19

The suppliers try to achieve some price advantages by differentiating their products from other similar products.

Answer 19

Monopolistic competition.

Question 20

Monopolistic competition is much like pure competition in that there are many suppliers and the barriers to entry are rather low.

Answer 20

True.

Question 21

In this market system, the government acts as economic commander in chief making decisions for everyone.

Answer 21

Command.

Question 22

Market prices are determined by consumer demand; no supplier has any influence over the market price, and thus, the suppliers are often referred to as price takers.

Answer 22

Pure competition.

Question 23

There are large numbers of firms producing standardized products.

Answer 23

Pure competition.

Question 24

“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest”

W. Clement Stone.
Vicencio “Vince” Dizon.
Adam Smith.
Peter Drucker.

Answer 24

Adam Smith.

Question 25

The negative effect of the traditional market system is that it causes a huge disparity between the rich and the poor.

Answer 25

False.

Question 26

Market system depending on past decisions.

Answer 26

Traditional.

Question 27

The positive effects of the Tradition market system is that we utilize tried and tested decisions, as well as we preserve the environment and values.

Answer 27

True.

Question 28

The command market system is closely related to Socialism.

Answer 28

True.