MTTC 105 Economics Exam Questions with Correct Answers
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MTTC 105 Economics
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MTTC 105 Economics
MTTC 105 Economics Exam Questions with Correct Answers
Classification of various markets by economists - Answer--existence of a competition
-number and size of suppliers
-influence of suppliers over price
-variety of available products
-ease of entering the market
5 types of Market Failure ...
MTTC 105 Economics Exam Questions
with Correct Answers
Classification of various markets by economists - Answer--existence of a competition
-number and size of suppliers
-influence of suppliers over price
-variety of available products
-ease of entering the market
5 types of Market Failure - Answer--inadequate competition
-inadequate information
-immobile resources
-negative externalities, or side effects
-failure to provide public goods
Externalities - Answer-side effects of a market that affect third parties. These effects can
be either negative or positive
Inputs - Answer-every good and service requires certain resources... these inputs of
referred to as factors of production
The 4 Factors of Production - Answer-labor, land, capital, entrepreneurship
Fixed Cost - Answer-a cost that does not change, no matter how much of a good is
produced... land and equipment
Variable costs - Answer-costs that vary directly with the level of production... labor
Factor Income - Answer-- labor (earns wages)
- capital (earns interest)
- land (earns rent)
- entrepreneurs (earn profit)
Each factor's income is determined by its contribution.
Perfect Competition - Answer-all existing firms sell an identical product. The firms are
not able to control the final price. In addition, there is nothing that makes it difficult to
become involved in or leave the industry. Anything that would prevent entering or
leaving an industry is called a barrier to entry. An example of this market structure is
agriculture
Monopoly - Answer-a single seller controls the product and its price. Barriers to entry,
such as prohibitively fixed cost structures, prevent other sellers from entering the market
, Monopolistic Competition - Answer-a number of firms sell similar products, but they are
not identical, such as different brands of clothes or food. Barriers to entry are low
Oligopoly - Answer-only a few firms control the production and distribution of products,
such as automobiles. Barriers to entry are high, preventing large numbers of firms from
entering the market
Natural Monopoly - Answer-a single supplier has a district advantage over the others
Geographic Monopoly - Answer-only one business offers the product in a certain area
Technological monopoly - Answer-a single company controls the technology necessary
to supply the product
Economics - Answer-the study of the ways specific societies allocate resources to
individuals and groups within that society
In general, the economic system that drives an individual society is based on: what
goods are produced, how those goods are produced, and who acquires the goods or
benefits from them
Macroeconomics - Answer-the study of economy-wide phenomena, including inflation,
unemployment, and economic growth
studies larger systems
Looks at economic trends and structures on a national level
variables studied include: output, consumption, investment, government spending, net
exports
Microeconomics - Answer-the study of the economic behavior and decision making of
small units, such as individuals, families, and businesses
studies smaller systems
elements studied are factors of production, cost of production, and factor income. These
factors determine production decisions of individual firms, based on resources and
costs
A Market economy - Answer-is based on supply and demand which is determined by
consumers
Demand - Answer-has to do with what customers want and need, as well as what
quantity those consumers are able to purchase based on other economic factors
Supply - Answer-Refers to how much can be produced to meet demand, or how much
suppliers are willing and able to sell
Market Equilibrium Price - Answer-where the needs of consumers meet the needs of
suppliers.
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