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Exam 2: How Economic Issues Affect Business

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Question 41

True/False

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History shows that free-market capitalism leads to a fair and equitable distribution of wealth.

A) True
B) False

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Question 42

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Susan Gilles wants to invest in a Tim Horton's franchise but opts not to once she finds out just how much it costs to buy a franchise.She decides to start her own independent coffee shop.She understands the need to differentiate her business from all the other coffee shops,given the type of competition that exists in this industry,which is:

A) an oligopoly.
B) perfect competition.
C) monopolistic competition.
D) a monopoly.

E) B) and D)
F) None of the above

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Question 43

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The top tax rate on personal income in most socialist economies is usually lower than the top tax rate on personal income in capitalist economies.

Adam Smith wrote The Wealth of Nations.

When the supply curve and demand curve for a particular good are on a single graph,the point at which the two curves intersect identifies the:

Which of the following people would tend to favour a socialist economy?

The economic system that has led to wealth creation in most of the world is known as:

In recent years,productivity in the manufacturing sector of the Canadian economy has been:

Explain how prices are determined in a free-market economy.

Adam Smith's theories focused on explaining the best way to divide the fixed resources we have available,rather than on how to create more wealth.

__________ is a condition in which the rate of inflation is declining.

Supporters of a free market would argue that because supply and demand interactions determine prices,there is no need for government involvement or planning.

Permany is a nation with an economic system that closely approximates pure capitalism.While Permany's economy is likely to generate a great deal of wealth,it may do a poor job of providing an acceptable level of income for the elderly or disabled.

Capitalism is the foundation of the Canadian economic system.

Economists refer to a market in which a few sellers dominate the supply side as monopolistic competition.

One of the drawbacks of free markets is the fact that competition in such markets undermines the ability of price to adjust to its equilibrium value in the long run.

Jane's Garden Center exists in a market where there are many sellers and no seller is large enough to dictate the price of a product.Under what degree of competition does Jane's company compete?

The quantity of a good or service that manufacturers or owners are willing to sell at different prices during a specific time period is known as the:

In most large cities there are a large number of bakeries.These bakeries produce similar,but not identical,products.Some bakeries claim to have the best cheesecakes in town,while others brag about their cookies or specialty breads.The bakery market in a large city is an example of:

Any output produced by Canadian firms is included in the value of the Canadian GDP,even if the output was produced in a foreign country.