Economic Concepts

Question 0

Which of the following enters into the determination of gross domestic product of a country? 
           Imports               Exports
A.        Yes                       Yes
B.        Yes                       No
C.        No                        Yes
D.        No                         No

Answer 0

A. Yes, Yes

• Net exports is included in the determination of a county’s gross domestic product. Net exports equals Exports minus Imports.

Question 1

Macro-environmental analysis is concerned with the analysis of?

A. Economic market structure
B. An Industry
C. The characteristics of a country or region.
D. A firm

Answer 1

C. The characteristics of a country or region.

Question 2

A good produced in 2008 that was in finished goods inventory on December 31, 2008, and was sold in January 2009 would be included in whole or in part in the GDP of which years? 
          2008            2009
A.       Yes               Yes
B.        Yes              No
C.        No               Yes
D.        No               No

Answer 2

2008 2009

B. Yes No

Question 3

In a perfect monopoly market structure, which of the following is characteristic of a natural monopoly?

A. A firm has control of an essential input to the production process.
B. A firm has increasing returns to scale.
C. A firm owns a secret formula
D. A firm has a government-granted exclusive franchise

Answer 3

B. A firm has increasing returns to scale.

Question 4

In perfect competition, which of the following is always correct?
A. Price equals total revenue
B. Price equals average total cost
C. Price equals marginal cost
D. Price equals marginal revenue

Answer 4

D. Price equals marginal revenue

Question 5

If both demand and supply have traditional curves, a higher equilibrium price may be caused by which one of the following?
A. A decrease in demand
B. An increase in demand
C. An increase in supply 
D. A production technology innovation

Answer 5

B. An increase in demand

Question 6

During 2008, Roy's disposable income was $100,000 and he spent $90,000 on consumable goods. During 2009, Roy's disposable income increased to $200,000 and he spent $150,000 on consumable good. For 2009, when compared to 2008, what is Roy's marginal propensity to consume?
A. .60
B. .75
C. .80
D. $150,000

Answer 6

A. .60

$200,000 - $100,000= $100,000
$150,000 - $ 90,000= $ 60,000

$60,000/ $100,000= .60

Question 7

Which of the following is least likely to be a risk encountered when goods are outsourced to a foreign supplier and payment is denominated in the foreign supplier's currency?
A. Quality risk 
B. Security risk
C. Market risk
D. Currency exchange risk

Answer 7

C. Market risk