Name: ________________________ Class: ___________________ Date: __________
ID: A
Chapter 7&8 Test True/False Indicate whether the statement is true or false. ____
1. Market situations lacking one or more of the characteristics of perfect competition are called imperfect competition.
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2. A government monopoly is a monopoly based on ownership or control of a manufacturing method or process.
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3. The monopolist does not use an equilibrium price to determine prices.
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4. The monopolistic competitor operates in a market with many well-informed buyers and sellers.
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5. Non-price competition is the use of advertising, giveaways, and other promotional campaigns to win customers.
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6. The United States government uses taxes to reduce the effects of negative externalities.
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7. The civilian labor force includes members of the armed forces.
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8. Most Americans favored unions in the 1930s but shifted to favoring management after World War II.
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9. The closed shop was made illegal by the Taft-Hartley Act of 1947.
____ 10. It is illegal for the president of the United States to interfere in labor disputes. Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 11. Perfect competition is characterized by all of the following EXCEPT a. a large number of buyers and sellers. c. sellers acting together to set prices. b. identical products. d. well-informed buyers and sellers. ____ 12. A monopoly that is based on the ownership or control of a manufacturing method, process, or other scientific advance is a a. geographic monopoly. c. government monopoly. b. natural monopoly. d. technological monopoly. ____ 13. A decrease in competition within an industry can result in a. more efficient resource allocation. b. lower prices. c. a firm wielding economic and political power. d. increased output. ____ 14. The Sherman Antitrust Act a. outlawed restraints and monopolies that hindered trade. b. nationalized the railroads. c. established the FDA. d. applied only to banking.
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Name: ________________________
ID: A
____ 15. The government is involved in the U.S. economy for all of the following reasons EXCEPT to a. promote and encourage competition. b. prevent monopolies that deny the public the benefits of competition. c. regulate industries in which a monopoly is in the public interest. d. promote the development of market externalities. ____ 16. Mergers and acquisitions might result in a. more competition. c. increases in consumer demand. b. smaller companies. d. inadequate competition. ____ 17. The Federal Trade Commission (FTC) reviews mergers to ensure that they do not substantially lesson competition. The agency certainly was busy in 1998. In that year, the number of announced mergers involving American companies exceeded 7,750. A survey conducted in 1999 suggests that the FTC’s workload will not dwindle in the near future. Of the companies polled in the survey, more than one third said that they intended to acquire other companies within the year. Source: Bergen Record, April 23, 1999.
This passage suggests a trend toward a. corporate expansion. b. greater competition. c. more power for the Federal Trade Commission. d. deregulation. ____ 18. On an average shopping trip, a consumer’s eye lingers on a product for only about 2.5 seconds. In order to stay competitive, companies experiment with new formulas, along with the color and size of the product’s packaging. These research and development costs can range from $100,000 for adding a new color to an existing product line to millions of dollars for the creation of a new product.
a. b.
According to the passage, companies are trying to compete through economies of scale. c. product differentiation. price-fixing. d. nonprice competition.
____ 19. A rose is a rose is a rose, wrote Gertrude Stein. But don’t tell that to flower sellers who are trying to differentiate themselves from their fellow petal-pushers. To stand out in a crowd, U.S.A. Floral Products, the nation’s biggest flower distributor, is test-marketing a plan to sell flowers sporting a tag telling consumers the last date the flowers can be sold for maximum freshness—the equivalent of a “sell by” date on a quart of milk. Source: Business Week, February 15, 1999.
Based on the passage, U.S.A. Floral Products is differentiating its product from competitors’ by trying to convince customers that its roses are a. more red. c. less expensive. b. fresher. d. higher quality. 2
Name: ________________________
ID: A
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____ 28.
By passing truth-in-advertising laws, the government hopes to influence producers, such as the toy manufacturer in the cartoon, to a. hide product defects. c. stop advertising to children. b. make better products. d. lower the prices of their products. The Fair Labor Standards Act a. made it illegal to prosecute unions under the Sherman Antitrust Act. b. prevented courts from issuing injunctions against unions engaged in peaceful strikes. c. established the right of unions to collective bargaining. d. established a federal minimum wage. The first federal legislation to exempt unions from the antitrust laws was the a. Taft-Hartley Act. c. Clayton Antitrust Act. b. Sherman Antitrust Act. d. Interstate Commerce Act. Workers who have the skills to operate machines and who require a minimum amount of training are a. unskilled labor. c. skilled labor. b. semiskilled labor. d. professional labor. The theory that wages are based on the supply and demand for a worker's skills is the a. signaling theory. c. traditional theory of wages. b. theory of negotiated wages. d. seniority theory. All of the following can be used to establish more equal pay between men and women EXCEPT the a. Civil Rights Act of 1964. c. set-aside contracts. b. Fair Labor Standards Act. d. Equal Pay Act of 1963. The National Labor Relations Act a. made it illegal to prosecute unions under the Sherman Antitrust Act. b. established the right of unions to collective bargaining. c. prevented courts from issuing injunctions against unions engaged in peaceful strikes. d. established a federal minimum wage. Workers with knowledge-based education and managerial skills are a. unskilled labor. c. skilled labor. b. semiskilled labor. d. professional labor. The invisible barrier that hinders women and minorities from advancement up the corporate ladder a. is the comparable worth issue. b. is known as the glass ceiling. c. has been ignored by Congress. d. has been reinforced by use of set-aside contracts. 3
Name: ________________________
ID: A
____ 29.
a. b. c. d.
Based on the illustration, workers in Texas must join their company’s union. are not required to join their company’s union. may not be locked out of their jobs by management. may not be forced to participate in their union’s strikes.
____ 30. The union representing flight attendants at American Airlines rejected an offer of arbitration from federal mediators yesterday, assuring the start of a 30-day cooling-off period after which its members will be legally free to strike. The major issue dividing the two sides is pay. The flight attendants now earn $15,000 to $35,000 a year, the union said. American said that the union’s last proposal would cost the airline $570 million more over six years than its final offer. The union said that the gap was closer to $200 million. Source: The New York Times, May 31, 2001.
If the union in the passage had accepted the offer of arbitration, how would this affect the outcome of negotiations? a. The union would not get what it wants because the arbitrator works for the government. b. The union would give up its right to collective bargaining. c. Both sides would have to accept the arbitrator’s decision. d. The arbitrator would suggest a solution, but the two sides would not have to accept it.
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Name: ________________________
ID: A
____ 31.
a. b.
Study the graphs. Compared to janitors, the graph for surgeons shows high demand and high supply. c. low demand and high supply. high demand and low supply. d. low demand and low supply.
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Name: ________________________
____ 32. a. b. ____ 33.
ID: A
According to the graph, in 1980, women were earning approximately 20% less than men. c. 40% less than men. 60% less than men. d. 30% less than men.
According to the graph, if men in general were earning approximately $20,000 in 1965, women would have been earning approximately a. $10,000. c. $14,000. b. $12,000 d. $8,000.
____ 34. Some analysts in the past contended that the computer age would result in less work for humans. What’s happening, however, is that more people are working more hours. The average number of hours worked per week has increased from 40 hours in 1973 to 50 hours today. Why is this happening? One explanation is that computers don’t replace human thought and endeavor, they extend it. By allowing people to communicate easily at any time from any place, computers increase the amount of time people work.
a. b. c. d.
Which of the following situations best exemplifies the main point of the passage? A factory worker loses his job when the company installs a robot to do his work. An executive e-mails a meeting agenda to co-workers from home before going to bed. A new customer database enables the company to track customer purchases more efficiently. A new software helps managers make more accurate sales predictions.
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Name: ________________________
ID: A
____ 35.
a. b. c. d.
From the graph, you can conclude that 1968 had a higher minimum wage than in any other year. lower inflation rate than in any other year. higher inflation rate than in any other year. minimum wage with more purchasing power than in any other year.
Matching Match each statement with the correct item below. a. theoretical situation in which well-informed, independent buyers and sellers exchange identical products b. agreeing to charge the same or similar prices c. unintended side effect that either benefits or harms a third party not involved in the activity d. real or imagined differences between competing products e. unwanted harm, cost, or inconvenience suffered by a third party because of the actions of others f. legally formed combination of corporations or companies g. market situation in which costs are minimized because a single firm produces the product h. belief that government should not interfere with commerce or trade i. situation in which average cost of production falls as the firm gets larger j. market structure in which a few very larger sellers dominate the industry ____ ____ ____ ____ ____ ____ ____
36. 37. 38. 39. 40. 41. 42.
laissez-faire natural monopoly trust perfect competition economies of scale oligopoly negative externality
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Name: ________________________
ID: A
Match each statement with the correct item below. a. standard amount of pay given for work performed b. employment situation where workers do not have to join a union but must pay union dues c. length of time a person has been on a job d. lowest wage that can be paid by law to most workers e. mass refusal to buy products from targeted companies f. People should receive equal pay for work that is different from, but just as demanding as, other types of work. g. laborers who work primarily with their hands because they lack training h. employment situation where new workers must join a union after being hired i. state law making it illegal to force workers to join a union j. Labor and management agree to accept a third party's decision as binding. ____ ____ ____ ____ ____ ____ ____ ____
43. 44. 45. 46. 47. 48. 49. 50.
unskilled labor arbitration union shop comparable worth right-to-work law wage rate seniority minimum wage
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