Applied Economics (Quiz Answer Key) PDF

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APPLIED ECONOMICS QUIZ ANSWER KEY 1. Economics is classified as an Applied Science because it deals with the study of human’s life and how he lives with other men. – FALSE 2. The interaction and relationship of the buyers and sellers – Market 3. When demand for goods/service exceeds production capacity, the price of the product increases - Demand-Pull 4. The remote environment of a firm includes the competitors, suppliers, customers, publics, and intermediaries. – False 5. The threat of substitute products increases when the price of the substitute product is higher. – False 6. The bargaining power of buyers increases when the switching costs are low. – True 7. This segment refers to potential and actual changes in the physical environment and business practices that are intended to positively respond to and deal with those changes. - Environment Factor 8. This factor represents how organizations and governments mutually try to influence each other, and how firms try to understand these influences (current and projected) on their strategic actions - Political Factor 9. This factor refers to the nature and direction of the economy in which a firm competes or may compete. Examples are interest rates, inflation rates, business savings rate. - Economic Factor 10. This factor is concerned with a society’s attitudes and cultural values. Socio-Cultural Factor 11. A group of firms that produce similar products or offer similar services that are close substitutes. – Industry 12. Refers to nature and degree of competition in the market for goods and services. - Market Structure 13. Factors beyond the control of the firm that influence its choice of direction and action, organizational structure, and internal processes. External Environment 14. this represents the rate at which the cost of goods and services increase over a period of time – Inflation 15. A type of inflation wherein the price increases due to an increase in production costs. - Cost-Push 16. If demand increases, and supply remains unchanged, a _______ will result, leading to a higher equilibrium price. – shortage 17. If demand remains unchanged, and supply decreases, a _________ will result, leading to a higher equilibrium price. – shortage 18. If demand decreases and supply remains unchanged, _____ will result, thus leads to a lower equilibrium price. – surplus 19. Examines small economic units and the components of the economy. – Microeconomics 20. It is the study of observing how economics theories work in practice. Applied Economics 21. What is the difference between Perfect Competition and Monopolistic Competition? - In Perfect Competition, firms produce identical goods,

while in Monopolistic Competition, firms produce slightly different goods. 22. Which of the following Market Structure types has a large number of firms that sell slightly different products. - Monopolistic Competition 23. Which of the following Market Structure Types has only a few competing firms- Oligopoly 24. Which of the following is the best example product for a Perfectly Competitive Market- Agricultural Products 25. One of the characteristics of a Monopoly is: - There is a unique product with no close substitutes. 26. Firms face competition when the good they produced - has a close substitute 27. A monopoly is a market with - one supplier 28. A Market Structure with a large numbers of firms, differentiated products, and free entry and exit is called: - Monopolistic Competition 29. Firms use marketing to: - all of the above 30. Environmental Scanning is an activity carried out by only new companies. – FALSE 31. Ferry trips and air travel can be substitute products. – TRUE 32. Which of the following is a technological factor? - E-Commerce 33. Which of the following is a social factor? - Tastes and trends 34. Which of the following is an economic factor – Inflation 35. Which of the following is an economic factor - Interest rates 36. Which of the following is an environmental factor? – Recycling 37. Which of the following is NOT a type of Market Structure? Competitive Monopoly 38. Monopoly and Monopolistic Competition mean the same – FALSE 39. The following are included in the industry environment, except: Ecological factors 40. The following are included in the Remote Environment, except: Creditors 41. The threat of substitute products increases when: - Buyers face few switching costs. 42. Perfect competition is composed of the following requirements except? - Barriers of entrants 43. It is a market situation in which there is only one seller of a product with barriers to entry of others. The product has no close substitutes. – Monopoly 44. Choose all the problems that could arise when government intervenes in the market. Choose 3. - Lack of incentives to be efficient in the public sector, Disincentive effects of higher taxes, Government ownership may lead to fewer choices 45. Please check all the benefits of government intervention in the market. Choose 3. - Provide merit goods (education, health) underprovided in the free market, Provide public goods (defense, law and order) not supplied in free market, Government can protect the environment, workers, and consumers.

46. Firms use marketing to: - all of the above 47. A Market Structure with a large number of firms, differentiated products, and free entry and exit is called: - Monopolistic Competition 48. A monopoly is a market with - one supplier 49. Firms face competition when the good they produced - has a close substitute 50. these are all nonmilitary people who are employed or unemployed. – LABOR FORCE 51. What are the characteristics of Microeconomics? – STUDIES INDIVIDUAL INCOME, ANALYZES DEMAND AND SUPPLY LABOR, DEALS WITH HOUSEHOLDS AND FIRMS DECISIONS, STUDIES INDIVIDUAL PRICES, ANALYZES DEMAND AND SUPPLY OF GOODS 52. What are the characteristics of Macroeconomics? – ANALYZES TOTAL EMPLOYMENT IN THE ECONOMY, STUDIES NATIONAL INCOME, DEALS WITH AGGREGATE DECISIONS, STUDIES OVERALL PRICE LEVEL, ANALYZES AGGREGATE DEMAND AND AGGREGATE SUPPLY 53. It is the study of observing how economics theories work in practice. – APPLIED ECONOMICS 54. A contract between two parties, the employer and the employee – EMPLOYMENT 55. When does the bargaining power of buyer increases? – When switching costs are low (to other industry products) 56. The intense rivalry of competitors occurs when: - The product or service lacks different or switching cost....