chp 5 quiz
Name:
Date:
Period:
Part 1: Main Idea
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1. According to the law of supply, when prices increases,
A. demand increases
B. quantity demanded increases
C. supply increases
D. quantity supplied increases
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2. Which item shows all fixed costs?
A. mortgage, shipping, wages
B. business licenses, mortgage, shipping
C. insurance, resources, utilities
D. business licences, insurance, mortgage
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3. Which of the following is a variable cost?
A. raw materials to make product
B. rent for a storage warehouse
C. cost of utilities after hours
D. managerial salaries
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4. A business that discovers a decline in profit can best solve the problem by
A. firing any workers who were hired since the business had maximum profits
B. hiring more workers until the former level of profit is reached
C. creating a production costs schedule to find the point when increasing returns change to
diminishing returns
D. creating a production costs and revenues schedule to find the profit-maximizing output
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5. You own a small bakery that supplies cheesecakes to local restaurants. Which of the following actions is most
likely to help you increase supply quickly?
A. buy a new oven that bakes more cheesecakes simultaneously
B. research to find a cheaper long-distance shipper you can use
C. apply for a government subsidy for producers of dairy products
D. train your chefs in how to beat the batter to a smoother consistency
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6. Which of the following is most likely to improve labor productivity?
A. hiring more workers
B. firing less-experienced workers
C. providing training for workers
D. providing bonuses to workers
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7. An automobile manufacturer learns that a foreign country is about to tax all the rubber it exports, thus raising
prices. What is the carmaker most likely to do?
A. double pre-tax production, then return to normal levels post-tax
B. plan to produce slightly fewer cars after the price of rubber goes up
C. ignore the tax because it won't affect the automobile business
D. drastically reduce the number of cars in production because of increased costs
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8. Which of the following businesses is most likely to have an inelastic supply?
A. a custom T-shirt shop
B. a contractor that builds highways
C. a roadside popcorn vendor
D. a beauty salon and manicurist
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9. Manju opens the first Indian restaurant in her city, and it is a success. How will her success most likely affect
the number of producers?
A. Other people in the restaurant business will decide that Manju has cornered the market, so
they will open restaurants in a different city.
B. A man with a chain of Japanese restaurants will conclude that the city is a good market to
sell Japanese food.
C. A travel agency that specializes in booking vacations at India will open next door to
Manju's restaurant.
D. Two more Indian restaurants will open, but because of the limited number of customers,
one will eventually fail.
____ 10. Which of the following is an example of supply?
A. Jolene is studying to be a hairdresser at a vocational school.
B. Tyler is a mechanic, but he no longer takes repair jobs.
C. Ann has a commercial oven and bakes wedding cakes for friends.
D. Frank owns a restaurant, but the health department revoked his license.
____ 11. An ice cream shop surveyed its customers about how many scoops they would buy at different prices. The
owner wants to put the information in a format that will visually show the overall pattern. What should she
do?
A. Create a supply schedule.
B. Draw a supply curve.
C. Create a market supply schedule.
D. Draw a market supply curve.
____ 12. What happens when businesses hire too many workers?
A. The increased competition causes some employees to quit their jobs.
B. Fights among employees become more common.
C. Employees get in each other's way, causing disorganization and inefficiency.
D. The employees form a union and go on strike for higher wages.
____ 13. Which of the following lists contain only variable costs for an automobile factory?
A. building owner's insurance, plastic bumpers, wages
B. electricity to run drills, wages, windshields
C. electricity for fire alarm, tires, windshields
D. building owner's insurance, plastic bumpers, windshields
____ 14. Why do businesses want to know what their profit-maximizing output is?
A. It is the point at which each unit produced is earning the highest possible profit.
B. It is the point at which increasing returns switch to diminishing returns.
C. It is the point at which they can charge the highest price for their product.
D. It is the point at which their input costs are the lowest.
____ 15. Which of the following is an example of input costs affecting supply?
A. A tobacco company reduces production due to falling demand.
B. An ice cream manufacturer reduces production because winter is approaching.
C. A potato chip maker reduces production because competition lowers prices.
D. A toy maker reduces production because the price of lead-free paints rises.
____ 16. A small grocery store makes several technological changes. Which one will improve labor productivity?
A. Replace old cash registers with UPC scanners.
B. Install security cameras.
C. Buy automatic doors for the entrance.
D. Install a produce sprinkler.
____ 17. Which of the following government regulations is most likely to help increase supply?
A. Factories that cause pollution are fined.
B. Worker safety on construction sites is strengthened.
C. Herbicides that farmers use to kill weeds in their fields are banned.
D. Highway speed for truck drivers is reduced.
Part 2: Interpreting Graphs
Using the exhibit, choose the letter of the best answer.
____ 18. On curve S1, when the price is $2.50, what is the quantity supplied?
A. 200
B. 300
C. 400
D. 500
____ 19. On curve S1, at what price is the quantity supplied 200?
A. $2.00
B. $2.50
C. $3.00
D. $3.50
____ 20. What conclusion can you draw from this supply curve?
A. Competition drove one of the restaurants out of business.
B. An increase in the number of producers increased supply.
C. A drop in input costs caused producers to increase supply.
D. A drop in the number of producers decreased supply.
Part 3: Extended Response
Answer the following questions on the back of this paper or on a separate sheet of paper.
21.
Bill determines that there is an unmet demand for custom-built patio furniture, so he opens a carpentry
business. Soon, he is so busy that he has to put his customers on a waiting list. What do you predict will
happen?
Think About:
- the profit motive
- competition
- effect of number of producers on supply