Unit 7 Test

How do governments raise money to provide services?

• by collecting taxes

• by holding elections

• by posting road signs

• by hiring police officers

Use the information below to answer the question.

An owner started a new marketing campaign for her outdoor-gear store. This involved improving the store’s website and advertising on television, the radio, and mailing catalogs. As a result, the number of customers increased by 50% over several months.

What was the eventual effect of the advertising on store prices?

• a decrease due to greater volume of sales

• a decrease due to greater scarcity of goods

• an increase due to greater consumer demand

• an increase due to greater supplier competition

How would this graph MOST likely change if the price of a complementary good were to increase?

• The demand curve would shift to the left.

• The demand curve would shift to the right.

• The supply curve would shift to the left.

• The supply curve would shift to the right.

Which example BEST describes how the free enterprise system influences technological innovation?

• University researchers experiment to increase the number of bushels of corn per acre.

• The government offers incentives to discourage the outsourcing of production.

• The government regulates communications by assigning radio bandwidth.

• Companies compete to develop better cell phones for the market.

An owner of a landscaping business received extra income in the previous month. She is considering either buying a new lawnmower or spending the money on an advertising campaign in order to increase business in the next few months.

If the business owner chooses to spend the money on an advertising campaign, what is the opportunity cost?

• next month’s income

• increased business

• the extra income

• the lawnmower

Use the graph to answer the following question:

What does the point of intersection shown on this graph represent?

• elasticity

• equilibrium

• opportunity cost

• marginal production

Use the list below to answer the question.

• The market is dominated by a few large firms.

• Companies sell identical goods.

• Producers face high barriers to enter the industry.

Which type of market structure is described by this list?

• monopoly

• pure competition

• monopolistic competition

• oligopoly

Which characteristic distinguishes monopolistic competition from pure competition?

• the presence of many products and consumers

• a lack of price differences among products

• few barriers to enter or exit the market

• firm ability to make profits in the short-run

Use the graph below to answer the question.

Which factors are represented on this graph?

• Efficiency and Quantity

• Efficiency and Resources

• Resources and Price

• Quantity and Price

Use the diagram below to answer the question.

Which phrase BEST completes the diagram?

• Price increases

• Unemployment decreases

• Consumer demand decreases

• Government regulation increases