Virtual Reality #1

1)

The "ceteris paribus" assumption means:

other things held constant
all things can vary
firms want to maximize profits
firms want to maximize sales


2)

Types of models used to explain business and economic phenomena are:

mathematical models
graphic models
schematic models
all of the above


3)

One important criteria for evaluating a model and/or the assumptions on which it is based is:

the ability of the model to produce an answer you want
that all the assumptions are not consistent with one another
the ability of the model to explain observable behavior
the ability of the model to behave "well"


4)

Which of the following is not a part of the seven-step decision process?

establishing objectives
defining the problem
implementing and monitoring results
all are part of the seven-step process

5)

The "law of demand" refers to the concept:

that consumers are willing to purchase only if quality is high
that price and sales are inversely related
that effective demand and efficient demand are identical
that income and sales are positively related

6)

As normally drawn, market demand curves

are downward sloping to the right
are upward sloping to the right
may be upward or downward sloping
are horizontal

7)

Which determinants of demand are shown in a demand curve?

income
tastes and preferences
population
none of the above

8)

Price elasticity of demand

measures the slope of the demand curve
measures the sensitivity of quantity demanded to price changes
is defined as the percentage change in quantity demanded divided by percentage change in income
is defined as the change in quantity demanded divided by the change in price

9)

A firm's supply curve

is usually upward sloping to the right
represents an inverse relationship between price and quantity supplied
is negatively sloped
may never be accurately estimated

10)

The term "unemployment" refers to

the number of people out of work at any one point in time
the percentage of the population out of work at any one point in time
the percentage of people between 16 and 65 years of age who do not have a job
the percentage of people seeking employment who are between 16 and 65 years of age

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