Exam 1: Understanding the Canadian Business System

What is the potential impact if a company underestimates demand?

Entrepreneurs are important because they make lots of money. are good at making decisions. take risks to start new businesses. are good managers. are rich.

If the market for diamonds is at equilibrium and De Beers increased its prices, people would still demand the same quantity of diamonds.

What are the five factors of production?

Anon Corporation is a manufacturer of Widgets. Faced with increasing input material costs, the company is contemplating a price increase in the range of 15-20 percent. There are significant disagreements among senior personnel in the company about this move. Which of the following, if true, would weaken the argument for a price increase? The input costs of raw materials are expected to increase further in the coming months. Customers are loyal to the brand mainly because they believe in the quality of ingredients used. Anon's competitors have announced an increase in prices. One of Anon's major competitors has just declared bankruptcy. Market research done by the company reveals that demand for Widgets is readily affected by the price.

McDonnell Douglas, a manufacturer of large commercial aircraft, raises its prices of aircraft by 10 percent. Boeing, another manufacturer of large commercial aircraft, raises its prices by 9 percent. Airbus, a third manufacturer of large commercial aircraft, follows with an increase of 9.5 percent. Each of these companies is practicing a type of pricing strategy characteristic of controlled competition. monopolistic competition. an oligopoly. perfect competition. a monopoly.

The price at which the quantity of a product willing to be purchased by customers and the quantity of product willing to be made by a producer are equal is known as the break-even price. the oligopoly price. the balanced price the elastic price. either the market price or the equilibrium price.

A demand and supply schedule allows assessment of the relationship between different levels of demand and supply at different prices. describes the supply for a product. describes the demand for a product. is a formula by which one determines market equilibrium. is the contractual agreement made between the buyer and seller.

AB Distributors is a company that serves as a shipping intermediary for other companies. Its sales revenue has increased from the previous year. Jonathan, a sales manager at AB, says, "Since the company has increased its revenue, it is now more profitable." Which of the following, if true, would most weaken Jonathan's contention? AB Distributor's clients are happy with the company's services. Shipping costs for the industry have significantly increased over the last year. AB Distributor's employees are dissatisfied with the company's working conditions. The shipping intermediary industry has experienced a slowdown overall. Many of AB Distributor's employees are new to the business.

In economic terms, a "market" refers to a specific place like a supermarket.

If the market for chocolate was at the equilibrium point and suddenly half of the chocolate in the world disappeared, what would be the immediate effect? The price would increase due to a shortage. The price would decrease due to market equilibrium. The price would increase due to a surplus. The price would decrease due to a surplus. There would be no change in either price or demand.

How does a command economy differ from a market economy?

List the four degrees of competition that can exist in a private enterprise system.

The Canada Consumer Product Safety Act replaces the Hazardous Products Act. Food and Drug Act. Weights and Measures Act. Advertising and Packaging Act. Textile Labeling Act.

Which of the following is correct? In perfect competition, most firms in an industry are large. In monopolistic competition, there are fewer sellers than in perfect competition but still many buyers. All things considered, perfect competition is the ideal situation. In order for an oligopoly to exist, there must not be more than three sellers. In a monopoly, the firm that is the only supplier does not have to worry about how much consumer demand will fall as it raises its prices.

Bailey Wear manufactures children's clothing. The company is able to set its prices higher than its competitors because of the fine material it uses and the attention it pays to the quality of the sewing. Bailey Wear is operating in a competitive environment of monopolistic competition. perfect competition. oligopolistic competition. oligopoly. monopoly.

China's constitution has been amended to legitimate private enterprise.

Expert Electronics sells state-of-the-art desktop computer systems. It competes with several other large computer manufacturers. How would you characterize the level of competition for computers? How are prices set in this type of competitive environment? If Expert Electronics cuts the prices for its computer systems, how will competitors likely respond?

AB Distributors is a company that serves as a shipping intermediary for other companies. Its sales revenue has increased from the previous year. Jonathan, a sales manager at AB, says, "Since the company has increased its revenue, it is now more profitable." Which of the following points out a flaw in Jonathan's reasoning? Information about the company's expenses is necessary to tell whether it is profitable. AB Distributor may have lost money the previous year. Most of AB Distributor's employees are relatively new. Not all of the revenue may contribute toward profits. Many of AB Distributor's competitors may not be doing as well.

What is socialism?