BAM101 Midterm exam || Graded A+.
Microeconomics correct answers Focuses on individual parts of the economy.(households,
businesses and industries)
Consumers in a free market influence what is produced.
Point of equilibrium correct answers The point at which the supply and demand curves meet,
quantity supplied equals quantity demanded
market equilibrium correct answers the point of intersection of demand and supply curves of a
given commodity; at equilibrium the market is cleared of the commodity
Macroeconomics correct answers the study of economy-wide phenomena, including inflation,
unemployment, and economic growth
Four types of market structure correct answers perfect competition, monopolistic competition,
oligopoly, monopoly
Mixed economic systems correct answers An economy with varying degrees of free enterprise
and government control.
Communism correct answers A theory or system of social organization based on the holding of
all property in common, actual ownership being ascribed to the community as a whole or to the
state.
Socialism correct answers A system in which society, usually in the form of the government,
owns and controls the means of production.
Capitalism correct answers an economic and political system in which a country's trade and
industry are controlled by private owners for profit, rather than by the state.
economic responsibilities correct answers a business's duty to make a profit and increase
shareholder value
ethical responsibilities correct answers a business's duty to meet the expectations of society
beyond its economic and legal responsibilities
legal responsibility correct answers a company's social responsibility to obey society's laws and
regulations
philanthropic responsibilities correct answers additional behaviors and activities that society
finds desirable and that the values of the business support
shareholder correct answers A person who invests in a corporation by buying stock and is a
partial owner
, Stakeholders correct answers All the people who stand to gain or lose by the policies and
activities of a business and whose concerns the business needs to address.
absolute advantage correct answers the ability to produce a good using fewer inputs than another
producer
comparative advantage correct answers the ability of an individual, a firm, or a country to
produce a good or service at a lower opportunity cost than competitors
Central American Free Trade Agreement (CAFTA) correct answers trade agreement designed to
reduce tariff barriers between Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, the
Dominican Republic, and the United States
European Union correct answers An international organization of European countries formed
after World War II to reduce trade barriers and increase cooperation among its members.
NAFTA (North American Free Trade Agreement) correct answers An agreement for free trade
between the United States and Canada and Mexico
direct foreign investment correct answers active ownership of a foreign company or of overseas
manufacturing or marketing facilities
joint venture correct answers an agreement between two or more companies to share a business
project
branch office correct answers foreign office set up by an international or multinational firm
contract manufacturing correct answers a joint venture in which a company contracts with
manufacturers in a foreign market to produce its product or provide its service
licensing correct answers the legal process whereby a licensor allows another firm to use its
manufacturing process, trademarks, patents, trade secrets, or other proprietary knowledge
Exporting correct answers selling products to another country
Advantages of Sole Proprietorship correct answers Easiest to start
Least regulated
Single owner keeps all the profits
Taxed once as personal income
Disadvantages of Sole Proprietorship correct answers Limited to life of owner
Equity capital limited to owner's personal wealth
Unlimited liability
Difficult to sell ownership interest
lack of continuity
Microeconomics correct answers Focuses on individual parts of the economy.(households,
businesses and industries)
Consumers in a free market influence what is produced.
Point of equilibrium correct answers The point at which the supply and demand curves meet,
quantity supplied equals quantity demanded
market equilibrium correct answers the point of intersection of demand and supply curves of a
given commodity; at equilibrium the market is cleared of the commodity
Macroeconomics correct answers the study of economy-wide phenomena, including inflation,
unemployment, and economic growth
Four types of market structure correct answers perfect competition, monopolistic competition,
oligopoly, monopoly
Mixed economic systems correct answers An economy with varying degrees of free enterprise
and government control.
Communism correct answers A theory or system of social organization based on the holding of
all property in common, actual ownership being ascribed to the community as a whole or to the
state.
Socialism correct answers A system in which society, usually in the form of the government,
owns and controls the means of production.
Capitalism correct answers an economic and political system in which a country's trade and
industry are controlled by private owners for profit, rather than by the state.
economic responsibilities correct answers a business's duty to make a profit and increase
shareholder value
ethical responsibilities correct answers a business's duty to meet the expectations of society
beyond its economic and legal responsibilities
legal responsibility correct answers a company's social responsibility to obey society's laws and
regulations
philanthropic responsibilities correct answers additional behaviors and activities that society
finds desirable and that the values of the business support
shareholder correct answers A person who invests in a corporation by buying stock and is a
partial owner
, Stakeholders correct answers All the people who stand to gain or lose by the policies and
activities of a business and whose concerns the business needs to address.
absolute advantage correct answers the ability to produce a good using fewer inputs than another
producer
comparative advantage correct answers the ability of an individual, a firm, or a country to
produce a good or service at a lower opportunity cost than competitors
Central American Free Trade Agreement (CAFTA) correct answers trade agreement designed to
reduce tariff barriers between Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, the
Dominican Republic, and the United States
European Union correct answers An international organization of European countries formed
after World War II to reduce trade barriers and increase cooperation among its members.
NAFTA (North American Free Trade Agreement) correct answers An agreement for free trade
between the United States and Canada and Mexico
direct foreign investment correct answers active ownership of a foreign company or of overseas
manufacturing or marketing facilities
joint venture correct answers an agreement between two or more companies to share a business
project
branch office correct answers foreign office set up by an international or multinational firm
contract manufacturing correct answers a joint venture in which a company contracts with
manufacturers in a foreign market to produce its product or provide its service
licensing correct answers the legal process whereby a licensor allows another firm to use its
manufacturing process, trademarks, patents, trade secrets, or other proprietary knowledge
Exporting correct answers selling products to another country
Advantages of Sole Proprietorship correct answers Easiest to start
Least regulated
Single owner keeps all the profits
Taxed once as personal income
Disadvantages of Sole Proprietorship correct answers Limited to life of owner
Equity capital limited to owner's personal wealth
Unlimited liability
Difficult to sell ownership interest
lack of continuity
