Question 1

Exxon Mobil and Shell are two of the relatively few sellers in the oil-refining industry.Due to the tremendous capital investment required to enter this industry, these companies are insulated significantly from the threat of new competitive entrants and thus have considerable control over price.This market situation is referred to as a(n)
A) cartel.
B) monopoly.
C) natural monopoly.
D) oligopoly.
E) trust.

Accepted Answer

The market situation described is that of an oligopoly, which is characterized by a small number of large firms dominating the industry and having significant control over price due to barriers to entry such as high capital costs.

Question 2

Microsoft, which produces very popular Windows software, owns the copyright for its products.Microsoft has a(n) ____ for these products.
A) monopoly
B) oligopoly
C) natural monopoly
D) limited monopoly
E) illegal monopoly

Accepted Answer

Microsoft has a limited monopoly on their Windows software due to their ownership of the copyright. This means that while they have exclusive rights to produce and distribute the software, it is only for a limited period of time (usually around 20 years) before the copyright expires and the product becomes available for public use.

Question 3

A legal monopoly is also referred to as a(n)
A) limited monopoly
B) public monopoly
C) natural monopoly
D) oligopoly
E) legal oligopoly

Accepted Answer

The answer of A legal monopoly is also referred to...

Question 4

If all leading corporations in the soft-drink industry merged, this would
A) encourage pure competition.
B) encourage monopolistic competition.
C) lead to an oligopoly.
D) create a limited monopoly.
E) create a monopoly.

Accepted Answer

If all leading corporations in the soft-drink industry merged, they would form a single entity controlling the entire market, effectively creating a monopoly. This is because there would no longer be any competition within the industry, as all the major players would be operating as one entity.

Question 5

____ is the process of developing and promoting the differences between one's products and other similar products.
A) Advertising
B) Monopolistic competition
C) Product differentiation
D) Branding
E) Goods distinction

Accepted Answer

Product differentiation is the process of developing and promoting the differences between one's products and other similar products. It involves highlighting unique features, benefits, quality, design, packaging, and other attributes that set the product apart from its competitors. This strategy is commonly used in markets with high competition and where customers have many options to choose from. By differentiating the product, the company seeks to capture a larger market share, increase brand loyalty, and command higher prices.

Question 6

Public utilities are often referred to as
A) sole proprietorships.
B) monopolistic competitors.
C) monopolies.
D) oligopolies.
E) socialistic.

Accepted Answer

Public utilities are often monopolies because they are usually government-regulated, and only one company typically provides the service (e.g. water, electricity, gas) in a given area. This lack of competition allows them to set prices and control the market.

Question 7

____ is a market situation (or industry) in which there are few sellers.
A) Monopolistic competition
B) Pure competition
C) Monopoly
D) Oligopoly
E) Natural monopoly

Accepted Answer

Oligopoly is a market situation where few sellers dominate the market, often resulting in high barriers to entry and limited competition. Examples of oligopolies include the telecommunications industry, automobile industry, and the soft drink industry.

Question 8

Which of the following is not a characteristic of an oligopoly?
A) There are few sellers.
B) The seller has considerable control over price.
C) Any duplication of facilities is wasteful.
D) Sizable investments are required to enter the market.
E) The market actions of each seller can strongly affect other sellers.

Accepted Answer

This statement is not necessarily true for all oligopolies. In some cases, duplication of facilities may be necessary to compete with other sellers in the market. Also, it is not a defining characteristic of oligopoly.

Question 9

____ is a loose, subjective measure of how well off an individual or society is in terms of obtaining want-satisfying goods and services.
A) Employment success
B) Standard of wealth
C) Standard of living
D) Economic satisfaction
E) Satisfaction economic factor

Accepted Answer

The definition given in the question matches with the concept of Standard of Living. It is a subjective and loose measure of how well a person or society is living in terms of the availability of goods and services that they want and need. Employment success, economic satisfaction, and satisfaction economic factor are not commonly used terms in economics, while standard of wealth is more focused on the accumulation of assets rather than the provision of goods and services for a good life. Therefore, option C is the best choice.

Question 10

What must a monopoly, such as a public utility, account for when setting its prices?
A) A monopoly, because it has no competitors, can set prices as high as it likes.
B) A monopoly must consider customer demand, and then set prices at the most profitable level.
C) A monopoly must take into account what its top competitors are charging for the same product or service.
D) A monopoly has no say in what prices it will charge because the government sets the prices for all monopolistic industries.
E) A monopoly must look at the importance of each client, and then determine what respective rate each will be charged.

Accepted Answer

A monopoly, such as a public utility, must consider customer demand and set prices at the most profitable level. While a monopoly does not have competitors, it still needs to take into account the price sensitivity of its customers and ensure that it does not set prices so high that it drives some customers away. Additionally, monopolies are often regulated by the government, which may impose price controls or regulations on the industry.

Question 11

The Hamel family owns and operates an interior decorating business.Greg installs hardwood floors and chair rails; Stephanie reupholsters furniture and takes care of the finances; Ryan designs and makes draperies and pillows; and Allison coordinates the overall color, look, and design.The process the Hamel family uses to run its business is
A) specialisation.
B) division of service.
C) the factory system.
D) the domestic system.
E) the barter system.

Accepted Answer

The Hamel family uses specialisation, where each family member has a specific role in serving their clients.

Question 12

The maker of Hanes pantyhose attempts to set its product apart from the competition.As a result, the company obtained limited control over the price of its product.Achieving price control in this manner is known as
A) advertising.
B) distributional efficiency.
C) low-cost production.
D) niche marketing.
E) product differentiation.

Accepted Answer

The scenario mentions that the maker of Hanes pantyhose attempts to set its product apart from the competition. This is an example of product differentiation, which means creating a unique product or offering that distinguishes one company's products from another. As a result of this differentiation, the company obtained limited control over the price of its product.

Question 13

Randall Newman distributes rawhide to several different homes.In turn, each household produces a product such as satchels, belts, shoes, and boots, and then Randall sells the finished goods.This represents a(n)
A) oligopoly.
B) domestic system.
C) system of specialisation.
D) factory system.
E) barter system.

Accepted Answer

The distribution of raw materials to several different homes and the production of finished goods in each home represents a domestic system, which was a common form of production before the rise of factories and industrialization.

Question 14

The separation of a manufacturing process into distinct tasks and the assignment of different tasks to different individuals is called
A) specialisation.
B) entrepreneurship.
C) free market.
D) barter.
E) factory manufacturing.

Accepted Answer

The separation of manufacturing process into distinct tasks and the assigning of separate tasks to different people is called specialization. It increases productivity and efficiency in manufacturing processes.

Question 15

When Toyota experienced declining sales as a result of quality and safety issues, it began offering buyer incentives to new-car buyers.Nearly immediately, Ford and General Motors began similar promotions.These businesses
A) represent an oligopoly in which there are few sellers, and each seller has considerable control over price.
B) represent a monopoly in which only one firm supplies a product or products.
C) are engaging in monopolistic competition in which there are many buyers as well as a relatively large number of sellers that differentiate their products from those of competitors.
D) are engaging in pure competition, in which no single seller is powerful enough to affect prices.
E) are engaging in monopolistic competition, in which the products are very similar.

Accepted Answer

These businesses represent an oligopoly, a market structure characterized by a small number of firms that have significant market power, which allows them to influence prices through strategic actions such as offering buyer incentives. The immediate response by Ford and General Motors to Toyota's incentives indicates that these companies are closely watching each other's actions, a typical behavior in oligopolistic markets.

Question 16

The system in which raw materials are distributed by entrepreneurs to homes in which family members process those materials into finished products is referred to as
A) the factory system.
B) an apprenticeship.
C) specialisation.
D) free enterprise.
E) the domestic system.

Accepted Answer

The system described is the domestic system, in which the production of goods takes place in homes rather than in factories or other centralized locations. Raw materials are distributed by entrepreneurs (often known as putting-out or cottage industry merchants) to family members, who process the materials into finished products. The domestic system was prevalent in Europe from the 16th to the 19th centuries, before the rise of the factory system.

Question 17

Which of the following industries would most likely have the characteristics of an oligopoly?
A) Clothing
B) Restaurants
C) Automobiles
D) Cameras
E) Make-up

Accepted Answer

Automobiles typically have high barriers to entry, a small number of dominant firms, and differentiated products, all of which are characteristics of an oligopoly.

Question 18

A market or industry with only one seller is referred to as
A) a limited command system.
B) a monopoly.
C) an oligopoly.
D) monopolistic competition.
E) a perfect competitive market.

Accepted Answer

A market or industry with only one seller is referred to as a monopoly. In a monopoly, the single seller has complete control over the market and can set prices and control supply without the fear of competition.

Question 19

When General Mills and a few other firms dominate the cereal market, this is an example of
A) pure competition.
B) monopolistic competition.
C) oligopoly.
D) natural monopoly.
E) monopoly.

Accepted Answer

An oligopoly is a market structure where a few large firms dominate the market. In this case, General Mills and a few other firms dominate the cereal market, indicating an oligopoly.

Question 20

Although all casual clothing ultimately provides the same purpose, companies such as The Gap strive to make their brand seem unique from the many other brands available on the market.The market for casual clothing can best be characterised as
A) pure competition.
B) monopolistic competition.
C) an oligopoly.
D) a monopoly.
E) a natural monopoly.

Accepted Answer

The market for casual clothing is characterized as monopolistic competition because there are many firms competing with each other by offering slightly different products, such as different styles or designs, that are viewed as substitutes but not identical to one another. The Gap distinguishes itself from competitors through its branding and marketing.

Quiz 1: Introduction to Business

Microsoft, which produces very popular Windows software, owns the copyright for its products.Microsoft has a(n) ____ for these products.

A legal monopoly is also referred to as a(n)

If all leading corporations in the soft-drink industry merged, this would

____ is the process of developing and promoting the differences between one's products and other similar products.

Public utilities are often referred to as

____ is a market situation (or industry) in which there are few sellers.

Which of the following is not a characteristic of an oligopoly?

____ is a loose, subjective measure of how well off an individual or society is in terms of obtaining want-satisfying goods and services.

What must a monopoly, such as a public utility, account for when setting its prices?

The maker of Hanes pantyhose attempts to set its product apart from the competition.As a result, the company obtained limited control over the price of its product.Achieving price control in this manner is known as

Randall Newman distributes rawhide to several different homes.In turn, each household produces a product such as satchels, belts, shoes, and boots, and then Randall sells the finished goods.This represents a(n)

The separation of a manufacturing process into distinct tasks and the assignment of different tasks to different individuals is called

When Toyota experienced declining sales as a result of quality and safety issues, it began offering buyer incentives to new-car buyers.Nearly immediately, Ford and General Motors began similar promotions.These businesses

The system in which raw materials are distributed by entrepreneurs to homes in which family members process those materials into finished products is referred to as

Which of the following industries would most likely have the characteristics of an oligopoly?

A market or industry with only one seller is referred to as

When General Mills and a few other firms dominate the cereal market, this is an example of

Although all casual clothing ultimately provides the same purpose, companies such as The Gap strive to make their brand seem unique from the many other brands available on the market.The market for casual clothing can best be characterised as