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ETS Business Major Exit Exam Questions And Answers With Complete Study Quiz
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ETS Business Major Exit Exam Questions And Answers With Complete Study Quiz
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ETS Business Major Exit Exam Questions And AnswersWith Complete Study Quiz
What is scarcity and choice? ANS - Human wants and needs are unlimited and resources to satisfy them are
limited
- Choices must be made between the possible alternatives
3 questions every economy must answer: ANS 1. What to produce?
2. How to produce it?
3. For whom it is produced?
3 questions every economy must answer: What to produce? ANS Have to evaluate more than just needs.
Involves the wants and needs of individuals.
3 questions every economy must answer: How to produce it? ANS Center upon the methods and resources
(land, labor, capital, enterprise) used in the production process. Optimum way to achieve the desired output
utilizing these methods and resources.
3 questions every economy must answer: For whom it is produced for? ANS Issue of the distribution of the
output resulting from the application of the production methods and resources.
Market Imperfections/Market Failure occurs when ______. ANS Market equilibrium results in too many or too
few resources being used in the production of a good or service
- This can be caused by lack of competition, externalities, public goods
Market Imperfections: Lack of competition is bad because you ______. ANS Must have competition among
both producers and consumers for markets to function effectively
Market Imperfections: Externalities occurs when ______. ANS A cost or benefit is imposed on people other
than the consumers and producers of a product
- Ex. pollution from manufacturing negatively affects the community rather than either the buyer or seller
Market Imperfections: What are Public Goods? ANS Goods that are collectively consumed by everyone and
there is no way to bar people who do not pay from consumption
,- Ex. National defense
What is the Law of Demand? ANS An inverse relationship between the price of a good and that quantity buyers
are willing to purchase in a defined time period
What is the primary determinant of the quality demanded? ANS The price of the good - changes in the price of
a good result in movement of the equilibrium point along the demand line
What are the changes in demand? ANS Increase - (rightward shift) high equilibrium price and quantity
Decrease - (leftward shift) lower equilibrium price and quantity
Law of Supply states that ______. ANS More of a particular good will be supplied as the price of that good rises,
while less will be purchased as its price declines
What are Non-Price Determinants? ANS Any factor other than price that will cause a demand or a supply curve
to shift right or left
Examples of factors:
- Number of sellers in a market
-Increases in technology that make suppliers more efficient
- Prices of raw materials
- Taxes of subsidies which increase or decrease the price of a product
- Changes in the expectations of producers
- Prices of other good the firm could produce
What happens when there is an increase in supply? ANS There is a rightward shift, and it results in a lower
equilibrium price and a higher equilibrium quantity
What happens when there is a decrease in supply? ANS There is a leftward shift, and it results in a higher
equilibrium price and a lower equilibrium quantity
When happens when there is an equal increase in supply and demand? ANS There is a rightward shift, and an
increase in equilibrium quantity and no change in equilibrium price
, What happens when supply increases more than demand? ANS There is a rightward shift, and lower
equilibrium price and greater equilibrium quantity
What happens when demand increases more than supply? ANS There is a rightward shift, and high price and
greater equilibrium quantity
What happens when there is an equal decrease in supply and demand? ANS There is a leftward shift, and a
decrease in equilibrium quantity with no change in equilibrium price
What happens when supply decreases more than demand? ANS There is a leftward shift, and higher
equilibrium price and lower equilibrium quantity
What happens when demand decreases more than supply? ANS There is a leftward shift, and a lower price and
a lower equilibrium quantity
Shortage (Supply and Demand) occurs when ______. ANS A price is established below the equilibrium price
and demand exceeds supply
- Can be fixed when the price is free to move
- The increase in price will slowly reduce the quantity demanded and increase the quantity supplied
- Neither the supply or demand curves will move
Surplus (Supply and Demand) occurs when ______. ANS A price is established above the equilibrium price and
supply exceeds demand
- Can be fixed if the price is able to move
- The decrease in price will slowly increase the quantity demanded and decrease the quantity supplied
- Neither supply or demand curves will move
What is a Price Ceiling (Supply and Demand)? ANS A price set below the equilibrium price and results in a
shortage with quantity demanded exceeding quantity supplied.
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