BBA Major Field Exam – Business || A+ Graded Solutions.

Scarcity and Choice correct answers 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 correct answers What to produce? How to produce it? For whom it is produced? 3 Questions What to produce? correct answers Have to evaluate more than just needs. Involves the wants and needs of individuals. 3 Questions How to produce it? correct answers Center upon the methods and resources (land, labor, capital, enterprise) used in the production process. Optimum way to achieve the desired output utilizing these methods and resources. 3 Questions For whom it is produced for? correct answers Issue of the distribution of the output resulting from the application of the production methods and resources. Market Imperfections/Market Failure correct answers 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 Lack of competition (Market Imperfections) correct answers Must have competition among both producers and consumers for markets to function effectively Externalities (Market Imperfections) correct answers 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) Public Goods (Market Imperfections) correct answers Goods are collectively consumed by everyone and there is no way to bar people who do not pay from consumption (Ex. National defense) Law of Demand correct answers Inverse relationship between the price of a good and that quantity buyers are willing to purchase in a defined time period Price as the Determinants (Demand) correct answers Primary determinant of the quality demanded is the price of the good. Changes in the price of a good result in movement of the equilibrium point along the demand line. Nonprice Determinant (Demand correct answers These result in a shift (left or right) in the demand curve - number of buyers - buyer tastes and preferences - buyer income