Saga of the Volsungs

INTRODUCTION TO BUSINESS - BUSS101.B

SCHOOL OF BUSINESS AND INFORMATION SCIENCE

SPRING SEMESTER 2006

QUIZ #2 CH 1-4 FEB. 22, 2006

NAME______________________________________

1. A(n) _____________ curve shows the relationship between the price of a good and the quantity of that good people are willing and able to buy in a given time period.

A) demand

B) supply

C) utility

D) Laffer

2. The quantity of a good or service that manufacturers or owners are willing to sell at different prices during a specific time period is known as the:

A) supply of that product

B) demand for that product

C) equilibrium function for that product.

D) production possibilities curve for that product.

3. John complained to his buddy, Frank, that the prices of all the goods he and his family buy have increased a lot over the past year. Frank disagreed, saying that the prices of some goods have gone up a bit, but other prices have declined. Frank feels that the average price of consumer goods hasn't changed very much. In order to resolve their disagreement, John and Frank should look at recent figures for the:

A) GDP

B) CPI

C) PPI

D) MEW

4. A command system is characterized by:

A) reliance on the forces of supply and demand to determine what is produced.

B) reliance on the government to determine what is produced and who gets the output.

C) an extremely rapid rate of economic growth.

D) freedom of choice and freedom of competition.

5. The only deposits of a rare mineral known as longnectite are found in the nation of Swanland. Since no other nation has deposits of longnectite, Swan land has a(n)__________ in the production of this mineral.

A) bilateral advantage.

B) universal advantage.

C) absolute advantage.

D) internal advantage.

6. U.S. manufacturers have had difficulty in global markets because they have often failed to adapt their products to the needs of various markets.

A) True

B) False

7. A devaluation of the U.S. dollar would make American goods cheaper to foreign buyers.

A) True

B) False

8. The difference between money coming into a country (from exports) and money leaving the country (for imports) plus money flows from other factors such as tourism, foreign aid, and military expenditures is referred to as the:

A) balance of payments.

B) balance of trade.

C) balance of traded economies.

D) balance of currency.

9. Countries often used trade protectionism measures to protect their domestic industries from foreign competition.

A) True

B) False

10. Socialism and communism are both variations of a command economy.

A) True

B) False

11. American businesspersons often fail to adapt to foreign markets because they feel that American culture is superior to other cultures in the world.

A) True

B) False

12. The United States currently enjoys a favorable balance of trade with the rest of the world.

A) True

B) False

Use the following to answer question 13:

Meg A. Hertz is concerned about recent forecasts she has received regarding the level of economic growth. Seven years ago, Meg started her own business. Her firm, MEGA Machines, Inc., sold custom-made personal computers at deeply discounted prices over the Internet. Meg and her employees worked hard to provide quality computers, affordable prices, and excellent service. The first couple of years, MEGA Machines struggled and almost went under. However, during the third year, the firm began experiencing success. Meg had to hire several additional employees to keep up with the increasing sales volume. As sales and profits grew, Meg responded by continuing to expand the company. The firm now has over 100 full time employees and many part time workers. Recently, however, MEGA's sales have decreased, as have the sales of other firms in her industry. The drop in sales seems to be related to a decline in the national level of economic activity. A news story last week reported that, for the first time in several years, the nation's total output of goods and services declined during the last three months. If the forecasts