ENG103: ACADEMIC ENGLISH for BU113--                              Name__________________     
Critical Thinking and Communication in Business

Prof. Ch. Bauer-Ramazani

Lecture Guide/Quiz
The US Business System

DIRECTIONS: Use the notes you took in class to complete the following questions.  T/F, MC, and Fill-in-the-blank questions count 1 point; points for essay questions vary.

1. All of the following are part of the factors of production except

a. knowledge
b. ideas
c. start-up money
d. risk
e. employees
f.  minerals
g. entrepreneurs
h. All of the above are part of the factors of production.

2.  Entrepreneurs are generally characterized as being ___________________________.

3.  In which of the following economic systems are all of the factors of production controlled by government?

a. socialist system
b. communist system
c. planned economy
d. mixed economy
e. market economy
f. a and d
g. b and c
h. d and e

4.  What are some of the former socialist, Eastern block countries doing to reduce the size of the national debt?

a. raise taxes
b. privatize industries
c. ask Russia for financial help
d. return to socialism or communism

5.  Which of the following is the major difference between companies being in private hands versus companies being owned by the government?

a. Private owners work more efficiently because they want to make a profit.
b. Managers who work for a government-owned company work more efficiently because they want to make a profit.
c. The main goal of government-owned companies is to provide jobs.
d. Private owners need to work harder to be able to compete with other businesses.
e. A, b, and c
f.  A and d
g.  All of the above

6.  Which of the following is not a characteristic of the market economy?

a. private producers and suppliers
b. profits
c. private ownership of assets
d. competition
e. government ownership of assets

7.  Which is not one of the characteristics of the private enterprise system?

a. selling when/how/where/what/to whom we want
b. the freedom to pursue profits
c. private property rights
d. freedom of choice in terms of jobs and brands
e. All of the above are characteristics of the private enterprise system.

8.  Who published the book the Wealth of Nations and what was its major theme?
  1. Name: ___________________  
  2. Major theme of book: ______________________
  3. What is the meaning of laissez-faire and how does it apply to the US business system?

9.  T/F   In a market economy, supply and demand determine the allocation of resources.

10.  T/F The demand curve shows the quantity of items (widgets) that customers are willing and able to buy at various price levels.

11.  T/F The demand curve also shows the quantity of items (widgets) produced by companies.

12.  The intersection of supply and demand curves is called
  1. shortage
  2. surplus
  3. equilibrium price
  4. none of the above

13.  A surplus develops when

  1. Prices are too low and companies cannot sell their products.
  2. Demand is low due to high prices.
  3. Demand is high and companies increase prices
  4. None of the above
14.  When there are winter coats left in the store’s inventory in April, this is an example of a SURPLUS / SHORTAGE. (Circle the appropriate choice.)

15.  When Michael Jordan came out of retirement to play again for the Chicago Bulls, it was difficult to obtain tickets. What do you think happened?

  1. There was a shortage, and ticket prices increased.
  2. There was a surplus, and ticket prices decreased.
  3. There was an equilibrium of supply and demand, and prices stayed the same.
  4. None of the above
16.  The reason that companies decrease prices may be due to
  1. the fact that the company has a surplus.
  2. the fact that the company has a shortage.
  3. the fact that the company is trying to match supply and demand.
  4. the fact that the company is trying to stimulate demand.
  5. A, c, d
  6. all of the above
17.  Suppliers may __________________ the price in order to ____________ a shortage.
  1. decrease, decrease
  2. increase, reduce
  3. decrease, increase
  4. increase, increase
18.  T/F In the real world, the sellers have to determine how much the demand for a product will change if they increase prices.

19.  The interaction of supply and demand determines

  1. the market economy
  2. the price and quantity produced
  3. the number of competitors
  4. the shift in the demand curve
20.  If Domino’s Pizza has 200 pizzas left at 11 p.m. and it closes at 2 a.m.,
  1. it has a shortage of pizzas
  2. it should use promotions to sell the extra pizzas
  3. it should increase the price
  4. it should reduce the price
  5. it should review its production schedule of making pizzas ahead of time
  6. a and c
  7. b, d, e

21.  When a company charges $800 per computer instead of $1,000, it does so in order to

  1. produce more computers and lower costs.
  2. sell more computers and increase total profit.
  3. Reduce the demand for computers.
  4. Increase the demand for computers
  5. A and c
  6. B and d
22.  DRAW and EXPLAIN the demand/supply schedule. Use pizzas as an example. Label the axes in your graph and discuss the relationship of P (price) and Q from the demand and supply perspective. (5 points)




23.  T/F If demand for a product/service is high, competitors will enter the market.

24.  T/F As more competitors enter the market, the price for a product/service will increase.

25.  What factors might influence a supplier’s decision to produce more?
  1. consumer preferences
  2. the cost of inputs (labor, raw materials)
  3. the cost of technology
  4. the amount of taxes and other government regulations
  5. the amount of competition in the same industry (number of suppliers of the same product)
  6. the level of unemployment and the amount of disposable income
  7. all of the above
  8. none of the above
26.  What is good about competition?
  1. It decreases prices for consumers.
  2. It increases consumers’ choice of goods and services.
  3. It motivates producers to supply more and better products at lower prices.
  4. All of the above
  5. None of the above
27.  Firms can develop a competitive advantage by
  1. using more efficient techniques/employees
  2. keeping production costs lower than their competitors'
  3. lowering prices
  4. producing higher quality items than the competitors
  5. producing products to suit customer needs (product differentiation)
  6. all of the above
  7. a, b, c
  8. a, b, d, e
28.  T/F An example of pure competition can be found in wheat farming, as the product is the same on every farm (= homogeneous).

29.  What is not true in pure competition?

  1. Consumers have lots of choices regarding products.
  2. Prices are determined by supply and demand.
  3. Individual firms are able to control prices.
  4. There are many buyers and many sellers.
30.  What is not true about monopolistic competition?
  1. Individual firms have some level of control over prices.
  2. Prices can be higher or lower, depending on the amount of competition.
  3. Products supplied are identical (homogeneous).
  4. It is fairly easy to enter the market.
  5. A stationery store, Staples, and Office Max are examples of firms in monopolistic competition.
31.  What is not true about oligopoly?
  1. There are many, small sellers in the industry.
  2. Firms supply similar products.
  3. Firms have some control over prices.
  4. It is expensive for producers to enter the market.
  5. Examples include steel, auto, and airline companies.
32.  What is NOT true about monopoly?
  1. It is a legal form of business in the United States.
  2. There are many sellers in the industry.
  3. An individual firm has considerable control over prices.
  4. a. and b.
  5. All of the above are true.
33.  What is not true about a pure or natural monopoly?
  1. Examples of natural monopolies are the utility and gas companies.
  2. It is more cost effective and more efficient to have only one gas company and one utility company in an area.
  3. There is no government regulation of natural monopolies.
  4. The power of natural monopolies to raise prices is restricted by government.
34.  T / F Full employment means that everybody has a job.

35.  T / F Economic growth in an economy measures the number of goods and services produced.

36.  GNP stands for _____________ _________________ _________________.

37.  T / F GNP measures the goods and services produced by American companies in the U.S. only.

38.  GDP stands for _____________ ______________ _______________.

39.  T / F GDP measures the goods and services produced by American and foreign companies in the U.S.

40.  T / F Productivity increases when fewer employees are needed due to changes in technology.

41.  T / F The Balance of Trade (BAT) measures the number of imports vis-à-vis the number of exports.

42.  The U.S. is a major IMPORTER / EXPORTER of goods and services. (Circle one.)

43.  Government’s use of taxes and control of spending patterns in the economy is called ____________ ____________.

44.  Government’s control of interest rates, the money supply, and the amount of debt in the economy is called _______________ ____________.

45.  T / F When the Federal Reserve raises interest rates, then the amount of borrowing by firms will increase.