BEE1034 Answer Key for Week 3
Part 1: Multiple Choice Questions
1. The one lesson of business is:
a. tracing the consequences of a policy.
b. promoting a policy change to eradicate inefficiencies.
c. moving assets from lower to higher value uses, thereby creating wealth.
d. None of the above
ANSWER: c
2. A consumer values a car at $30,000 and a producer values the same car at $20,000. If
the transaction is completed at $24,000, the transaction will generate:
a. No surplus
b. $4,000 worth of seller surplus and unknown amount of buyer surplus
c. $6,000 worth of buyer surplus and $4,000 of seller surplus
d. $6,000 worth of buyer surplus and unknown amount of seller surplus
ANSWER: c
3. A creative entrepreneur is one who knows how to
a. Run a business
b. Escape the burden of taxes
c. Profitably exploit money making opportunities
d. All of the above
ANSWER: c
4. Which of the following describes a firm?
a. Purchases labor hours from workers
b. Borrows capital from investors
c. Combines labor and capital to create production, moving them from their
low value use to high value use
d. All of the above
ANSWER: d
, 5. If company X is successfully outsourcing its production of T-shirts to China, it is
a. Creating wealth by moving labor in China from lower value use to higher value
use
b. Should be stopped on economic grounds since it is destroying wealth
c. Destroying wealth by acquiring cheaper labor from China
d. Both A & C
ANSWER: a
6. The government can
a. Create wealth by not interfering in the markets in any way what so ever
b. Not affect wealth in the markets
c. Create wealth by enforcing property rights and contracts
d. Create wealth by making choice decisions for the market
ANSWER: c
7. Technological advancement creates unemployment in firms that shut down or labor that is laid
off. Wealth in this case is
a. Destroyed, since firms are shutting down and production of certain goods and services
decreasing
b. Created, since the dislocated labor and resources are absorbed by new firms created
through the technological innovation, moving them to higher value use
c. Destroyed, since technological progress is leading to higher unemployment
d. None of the above
ANSWER: b
8. Price ceilings are primarily intended to help
a. No one
b. Consumers
c. Producers
d. Government
ANSWER: b
Part 1: Multiple Choice Questions
1. The one lesson of business is:
a. tracing the consequences of a policy.
b. promoting a policy change to eradicate inefficiencies.
c. moving assets from lower to higher value uses, thereby creating wealth.
d. None of the above
ANSWER: c
2. A consumer values a car at $30,000 and a producer values the same car at $20,000. If
the transaction is completed at $24,000, the transaction will generate:
a. No surplus
b. $4,000 worth of seller surplus and unknown amount of buyer surplus
c. $6,000 worth of buyer surplus and $4,000 of seller surplus
d. $6,000 worth of buyer surplus and unknown amount of seller surplus
ANSWER: c
3. A creative entrepreneur is one who knows how to
a. Run a business
b. Escape the burden of taxes
c. Profitably exploit money making opportunities
d. All of the above
ANSWER: c
4. Which of the following describes a firm?
a. Purchases labor hours from workers
b. Borrows capital from investors
c. Combines labor and capital to create production, moving them from their
low value use to high value use
d. All of the above
ANSWER: d
, 5. If company X is successfully outsourcing its production of T-shirts to China, it is
a. Creating wealth by moving labor in China from lower value use to higher value
use
b. Should be stopped on economic grounds since it is destroying wealth
c. Destroying wealth by acquiring cheaper labor from China
d. Both A & C
ANSWER: a
6. The government can
a. Create wealth by not interfering in the markets in any way what so ever
b. Not affect wealth in the markets
c. Create wealth by enforcing property rights and contracts
d. Create wealth by making choice decisions for the market
ANSWER: c
7. Technological advancement creates unemployment in firms that shut down or labor that is laid
off. Wealth in this case is
a. Destroyed, since firms are shutting down and production of certain goods and services
decreasing
b. Created, since the dislocated labor and resources are absorbed by new firms created
through the technological innovation, moving them to higher value use
c. Destroyed, since technological progress is leading to higher unemployment
d. None of the above
ANSWER: b
8. Price ceilings are primarily intended to help
a. No one
b. Consumers
c. Producers
d. Government
ANSWER: b
