ETS Business Major Exit Exam UPDATED ACTUAL Questions And Correct
Answers
C
Terms in this set (233)
What is scarcity and choice? - Human wants and needs are unlimited and resources to satisfy them are limited
- Choices must be made between the possible alternatives
3 questions every economy must answer: 1. What to produce?
2. How to produce it?
3. For whom it is produced?
3 questions every economy must answer: What to Have to evaluate more than just needs. Involves the wants and needs of
produce? individuals.
3 questions every economy must answer: How to Center upon the methods and resources (land, labor, capital, enterprise) used in
produce it? the production process. Optimum way to achieve the desired output utilizing
these methods and resources.
3 questions every economy must answer: For whom it is Issue of the distribution of the output resulting from the application of the
produced for? production methods and resources.
Market Imperfections/Market Failure occurs when ___ _. Market equilibrium results in too many or too few resources being used in the
production of a good or service
- This can be caused by lack of competition, externalities, public goods
Market Imperfections: Lack of competition is bad Must have competition among both producers and consumers for markets to
because you __ _. function effectively
Market Imperfections: Externalities occurs when ___ _. A cost or benefit is imposed on people other than the consumers and producers
of a product
- Ex. pollution from manufacturing negatively affects the community rather than
either the buyer or seller
Market Imperfections: What are Public Goods? Goods that are collectively consumed by everyone and there is no way to bar
people who do not pay from consumption
- Ex. National defense
What is the Law of Demand? An inverse relationship between the price of a good and that quantity buyers are
willing to purchase in a defined time period
What is the primary determinant of the quality The price of the good - changes in the price of a good result in movement of the
demanded? equilibrium point along the demand line
What are the changes in demand? Increase - (rightward shift) high equilibrium price and quantity
Decrease - (leftward shift) lower equilibrium price and quantity
, Law of Supply states that __ _. More of a particular good will be supplied as the price of that good rises, while
less will be purchased as its price declines
What are Non-Price Determinants? Any factor other than price that will cause a demand or a supply curve to shift
right or left
Examples of factors:
- Number of sellers in a market
-Increases in technology that make suppliers more efficient
- Prices of raw materials
- Taxes of subsidies which increase or decrease the price of a product
- Changes in the expectations of producers
- Prices of other good the firm could produce
What happens when there is an increase in supply? There is a rightward shift, and it results in a lower equilibrium price and a higher
equilibrium quantity
What happens when there is a decrease in supply? There is a leftward shift, and it results in a higher equilibrium price and a lower
equilibrium quantity
When happens when there is an equal increase in supply There is a rightward shift, and an increase in equilibrium quantity and no change in
and demand? equilibrium price
What happens when supply increases more than There is a rightward shift, and lower equilibrium price and greater equilibrium
demand? quantity
What happens when demand increases more than There is a rightward shift, and high price and greater equilibrium quantity
supply?
What happens when there is an equal decrease in supply There is a leftward shift, and a decrease in equilibrium quantity with no change in
and demand? equilibrium price
What happens when supply decreases more than There is a leftward shift, and higher equilibrium price and lower equilibrium
demand? quantity
What happens when demand decreases more than There is a leftward shift, and a lower price and a lower equilibrium quantity
supply?
Shortage (Supply and Demand) occurs when ___ _. A price is established below the equilibrium price and demand exceeds supply
- Can be fixed when the price is free to move
- The increase in price will slowly reduce the quantity demanded and increase the
quantity supplied
- Neither the supply or demand curves will move
Surplus (Supply and Demand) occurs when ___ _. A price is established above the equilibrium price and supply exceeds demand
- Can be fixed if the price is able to move
- The decrease in price will slowly increase the quantity demanded and decrease
the quantity supplied
- Neither supply or demand curves will move
Answers
C
Terms in this set (233)
What is scarcity and choice? - Human wants and needs are unlimited and resources to satisfy them are limited
- Choices must be made between the possible alternatives
3 questions every economy must answer: 1. What to produce?
2. How to produce it?
3. For whom it is produced?
3 questions every economy must answer: What to Have to evaluate more than just needs. Involves the wants and needs of
produce? individuals.
3 questions every economy must answer: How to Center upon the methods and resources (land, labor, capital, enterprise) used in
produce it? the production process. Optimum way to achieve the desired output utilizing
these methods and resources.
3 questions every economy must answer: For whom it is Issue of the distribution of the output resulting from the application of the
produced for? production methods and resources.
Market Imperfections/Market Failure occurs when ___ _. Market equilibrium results in too many or too few resources being used in the
production of a good or service
- This can be caused by lack of competition, externalities, public goods
Market Imperfections: Lack of competition is bad Must have competition among both producers and consumers for markets to
because you __ _. function effectively
Market Imperfections: Externalities occurs when ___ _. A cost or benefit is imposed on people other than the consumers and producers
of a product
- Ex. pollution from manufacturing negatively affects the community rather than
either the buyer or seller
Market Imperfections: What are Public Goods? Goods that are collectively consumed by everyone and there is no way to bar
people who do not pay from consumption
- Ex. National defense
What is the Law of Demand? An inverse relationship between the price of a good and that quantity buyers are
willing to purchase in a defined time period
What is the primary determinant of the quality The price of the good - changes in the price of a good result in movement of the
demanded? equilibrium point along the demand line
What are the changes in demand? Increase - (rightward shift) high equilibrium price and quantity
Decrease - (leftward shift) lower equilibrium price and quantity
, Law of Supply states that __ _. More of a particular good will be supplied as the price of that good rises, while
less will be purchased as its price declines
What are Non-Price Determinants? Any factor other than price that will cause a demand or a supply curve to shift
right or left
Examples of factors:
- Number of sellers in a market
-Increases in technology that make suppliers more efficient
- Prices of raw materials
- Taxes of subsidies which increase or decrease the price of a product
- Changes in the expectations of producers
- Prices of other good the firm could produce
What happens when there is an increase in supply? There is a rightward shift, and it results in a lower equilibrium price and a higher
equilibrium quantity
What happens when there is a decrease in supply? There is a leftward shift, and it results in a higher equilibrium price and a lower
equilibrium quantity
When happens when there is an equal increase in supply There is a rightward shift, and an increase in equilibrium quantity and no change in
and demand? equilibrium price
What happens when supply increases more than There is a rightward shift, and lower equilibrium price and greater equilibrium
demand? quantity
What happens when demand increases more than There is a rightward shift, and high price and greater equilibrium quantity
supply?
What happens when there is an equal decrease in supply There is a leftward shift, and a decrease in equilibrium quantity with no change in
and demand? equilibrium price
What happens when supply decreases more than There is a leftward shift, and higher equilibrium price and lower equilibrium
demand? quantity
What happens when demand decreases more than There is a leftward shift, and a lower price and a lower equilibrium quantity
supply?
Shortage (Supply and Demand) occurs when ___ _. A price is established below the equilibrium price and demand exceeds supply
- Can be fixed when the price is free to move
- The increase in price will slowly reduce the quantity demanded and increase the
quantity supplied
- Neither the supply or demand curves will move
Surplus (Supply and Demand) occurs when ___ _. A price is established above the equilibrium price and supply exceeds demand
- Can be fixed if the price is able to move
- The decrease in price will slowly increase the quantity demanded and decrease
the quantity supplied
- Neither supply or demand curves will move
