Question

1 In a Socialist economic system own their individual human capital and the government most other non-human factors of production. This type of economic system is based on the basic belief that _________________________ is bad for society.

a economic inequality

b individual freedom

c economic greed

d individual prosperity

2 By its very nature a market economy is based on the presumption that consumers will buy products when they believe the ____________ derived is equal or better than the price required by the seller.

a value

b cost

c utility

d purpose

3 Among the many conclusions asserted by Adam Smith, his assertion about economic prosperity was based on which fundamental principle?

a Understanding the concept of survival of the fittest will lead to prosperity.

b freedom to own land or property was vital to the survival of any economy,

c Determining what motivates people was essential for creating economic prosperity.

d Command economies and structured markets must be in place before we can work toward prosperity.

4 What would be the most accurate rationale to explain the following assertion: People working in their own self-interest, who produce goods and services, create economic gain for all?

a By taking advantage of a vast supply of labor, people working in their own self-interest could hire others at very low wages.

b Entrepreneurs tend to include themselves in a group of people who need charitable support. A portion of the entrepreneur's profit (as required by law) goes to the charity of one's choice to support the less fortunate.

c In order to earn money and produce goods that improve lives, self-directed gain would provide jobs, and subsequently wages for others.

d The government pays entrepreneurs in the U.S. to produce goods, services, and wealth for others.

5 The next wave of marketable innovations will likely involve new ways to produce and conserve energy. If we can turn new technology into marketable products and services that produce energy the U.S. could see a surge in output of goods and services. The Department of Economic Development would document this surge by measuring the ______.

a consumer price index.

b number of workers who are frictionally employed.

c gross domestic product.

d consumer demand.

6 When businesses can promote different features of their products and consumers are willing to pay more for products containing the features they desire, the competitive environment would be characterized as:

a Perfect

b Oligopolistic

c Monopolistic

d Capitalist

7 As a new entrepreneur about on the verge of launching a new business you need to keep in mind you’re your company's profits are of little value if they are not accompanied by:

a a credible business model.

b an increase in customer loyalty.

c positive cash flow.

d a business plan.

8 Managing a new business and having the capacity to effectively evaluate operational performance requires new entrepreneurs be able to evaluate and understand:

a the necessary funding required to launch the business.

b the actions of their competitors.

c information contained within the financial statements.

d the forces of supply and demand in the market.

9 When a new business utilizes a cash-only approach in selling its goods and services as the basis for financing the growth of the business it has opted to use _____________________________ as the primary means of financing the growth of their company.

a Venture Capital

b Guaranteed Loans

c Microloans

d Bootstrapping

Answer 1

Answer 1: Correct option is b.

( Because according to the socialist view, individuals do not live or work in isolation but live in cooperation with one another. It is a massive social engineering experiment that wants to create a new individuals devoid of their selfish tendencies which leads to restricting individuals freedom.)

Answer 2: Correct option is a.

( Because when individuals make a trade they value what they are purchasing more than they value what they are giving in exchange for a commodity)

Answer 3: Correct option is c.

(Because by giving everyone freedom to produce and exchange goods as they pleased and opening the markets upto the domestic and foreign competition, people's natural self interest will promote greater prosperity than with stringent government regulations)

Answer 4: Correct option is c.

(Because the basic assumption is that both consumer and producer act with self interest to invoke not only the greatest benefits but the most prudently managed the financial decisions)

Answer 5: Correct option is c

(Because the gross domestic product equals the total amounts of goods and services produced in a nation, in one year)

Answer 6: Correct answer is a.

(Because it would produce the best possible economic outcomes for both consumers and society)

Answer 7: Correct option is d.

(Because it gives entrepreneurs the ability to lay out their goals and track their progress as their business begins to grow)

Answer 8: Correct answer is d.

(Because together they determine the prices of most goods and services)

Answer 9: Correct answer is d.

(Because it is building a company from ground up with nothing and from the cash coming in from the first sale)