Question 1

Capital goods are products which are owned by businesses rather than households.

Accepted Answer

A) True 
 B)False  FALSE

Question 2

Governments only ever intervene in the economy to stabilise the macroeconomic environment.

Accepted Answer

A) True 
 B)False  FALSE

Question 3

Which of the following could help to move an economy out of a recession?

Accepted Answer

A)  Taxing inefficient companies 
B)  Lowering taxes on goods and services 
C)  Raising interest rates 
D)  Buying more imported goods and services 
A)  Taxing inefficient companies 
B)  Lowering taxes on goods and services 
C)  Raising interest rates 
D)  Buying more imported goods and services B

Question 4

Which of the following is part of marginal cost?

Accepted Answer

A)  The cost of any rented factory, office and machinery 
B)  The raw material cost incurred in making one more unit of output 
C)  The total labour cost incurred in making the firm's output 
D)  The total sunk average cost allocated to the last unit of output 
A)  The cost of any rented factory, office and machinery 
B)  The raw material cost incurred in making one more unit of output 
C)  The total labour cost incurred in making the firm's output 
D)  The total sunk average cost allocated to the last unit of output

Question 5

Assume that a firm can produce 6 units of good X or 12 units of good Y per hour with its current resources. The opportunity cost of a unit of X is

Accepted Answer

A)  1/2 a unit of Y. 
B)  6 units of Y. 
C)  72 units of Y. 
D)  2 units of Y. 
E)  12 units of Y. 
A)  1/2 a unit of Y. 
B)  6 units of Y. 
C)  72 units of Y. 
D)  2 units of Y. 
E)  12 units of Y.

Question 6

You own the DVD boxed set of The Twilight Saga and have watched the films once already. The opportunity cost of watching them a second time

Accepted Answer

A)  is half the price of the DVD boxed set, since this is the second time you have watched them. 
B)  is the value of the best alternative use of the time you spend watching the DVDs. 
C)  cannot be calculated. 
D)  is zero. 
A)  is half the price of the DVD boxed set, since this is the second time you have watched them. 
B)  is the value of the best alternative use of the time you spend watching the DVDs. 
C)  cannot be calculated. 
D)  is zero.

Question 7

Rational decision- making involves computer- assisted mediation.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements is incorrect?

Accepted Answer

A)  If poverty were eliminated there would be no reason to study economics. 
B)  Economics is a behavioural science. 
C)  Economic analysis can be used to explain how both individuals and societies make decisions. 
D)  In large measure, economics is the study of how people make choices. 
A)  If poverty were eliminated there would be no reason to study economics. 
B)  Economics is a behavioural science. 
C)  Economic analysis can be used to explain how both individuals and societies make decisions. 
D)  In large measure, economics is the study of how people make choices.

Question 9

In the 'circular flow of income' model, consumers are labelled as households.

Accepted Answer

A) True 
 B)False

Question 10

Define what you consider to be the main microeconomic information that is of interest to a business economist.

Accepted Answer

The information chosen may include: pric

Question 11

Scarcity occurs because incomes are not allocated fairly.

Accepted Answer

A) True 
 B)False

Question 12

A planned motorway connecting two cities was originally expected to cost £200 million. After building part of the system at a cost of £150 million, the government realised that the total cost of the system would be £260 million rather than £200 million. At this point, the marginal cost of completing the motorway is best estimated as

Accepted Answer

A)  £260 million. 
B)  £60 million. 
C)  £110 million. 
D)  £50 million. 
A)  £260 million. 
B)  £60 million. 
C)  £110 million. 
D)  £50 million.

Question 13

What are demand- side and supply- side policies?

Accepted Answer

This is a way of looking at government p

Question 14

Macroeconomics is the branch of economics that examines

Accepted Answer

A)  outcomes of economic behaviour, evaluates them as good or bad, and prescribes preferred courses of action. 
B)  ways to understand behaviour and the operation of systems without making judgements. 
C)  the economic behaviour of aggregates (income, employment, and output) on a national scale. 
D)  the functioning of individual industries and the behaviour of individual decision- making units, i.e. business firms and households. 
A)  outcomes of economic behaviour, evaluates them as good or bad, and prescribes preferred courses of action. 
B)  ways to understand behaviour and the operation of systems without making judgements. 
C)  the economic behaviour of aggregates (income, employment, and output) on a national scale. 
D)  the functioning of individual industries and the behaviour of individual decision- making units, i.e. business firms and households.

Question 15

A reduction in supply will normally reduce price.

Accepted Answer

A) True 
 B)False

Question 16

Inputs are often called factors of production.

Accepted Answer

A) True 
 B)False

Question 17

The additional cost of producing one more unit of a product is known as a firm's _________	cost.

Accepted Answer

A)  monetary 
B)  real 
C)  marginal 
D)  average 
E)  opportunity 
A)  monetary 
B)  real 
C)  marginal 
D)  average 
E)  opportunity

Question 18

Scarce resources create an 'economic problem' because

Accepted Answer

A)  natural resources are limited. 
B)  consumers typically want to consume more goods and services. 
C)  some goods cost more than others. 
D)  A and B 
A)  natural resources are limited. 
B)  consumers typically want to consume more goods and services. 
C)  some goods cost more than others. 
D)  A and B

Question 19

In return for supplying factors of production, households are paid

Accepted Answer

A)  wages, rent and dividends. 
B)  wages, rent and retained profits. 
C)  goods and services. 
D)  pensions, interest and rent. 
A)  wages, rent and dividends. 
B)  wages, rent and retained profits. 
C)  goods and services. 
D)  pensions, interest and rent.

Question 20

What are the two main divisions into which economic ideas fall?

Accepted Answer

Macroeconomics and microeconomics.
• Mac

Exam 2: Economics and the World of Business

Capital goods are products which are owned by businesses rather than households.

Governments only ever intervene in the economy to stabilise the macroeconomic environment.

Which of the following could help to move an economy out of a recession?

Which of the following is part of marginal cost?

Assume that a firm can produce 6 units of good X or 12 units of good Y per hour with its current resources. The opportunity cost of a unit of X is

You own the DVD boxed set of The Twilight Saga and have watched the films once already. The opportunity cost of watching them a second time

Rational decision- making involves computer- assisted mediation.

Which of the following statements is incorrect?

In the 'circular flow of income' model, consumers are labelled as households.

Define what you consider to be the main microeconomic information that is of interest to a business economist.

Scarcity occurs because incomes are not allocated fairly.

What are demand- side and supply- side policies?

Macroeconomics is the branch of economics that examines

A reduction in supply will normally reduce price.

Inputs are often called factors of production.

The additional cost of producing one more unit of a product is known as a firm's _________ cost.

Scarce resources create an 'economic problem' because

In return for supplying factors of production, households are paid

What are the two main divisions into which economic ideas fall?

The Business Environment and Business Economics

Business Organisations

The Working of Competitive Markets

Business in a Market Environment

Demand and the Consumer

Demand and the Firm

Products, Marketing and Advertising

Costs of Production

Revenue and Profit

Profit Maximisation Under Perfect Competition and Monopoly

Profit Maximisation Under Imperfect Competition

An Introduction to Business Strategy

Alternative Theories of the Firm

Growth Strategy

The Small-Firm Sector

Pricing Strategy

Labour Markets, Wages and Industrial Relations

Investment and the Employment of Capital

Reasons for Government Intervention in the Market

Government and the Firm

Government and the Market

Globalisation and Multinational Business

International Trade

Trading Blocs

The Macroeconomic Environment of Business

The Balance of Payments and Exchange Rates

Banking, Money and Interest Rates

Business Activity, Employment and Inflation

Demand-Side Policy

Supply-Side Policy

International Economic Policy

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