Supply and Demand and Output Markets Skill

Principles of Macroeconomics, 9e - TB1 (Case/Fair/Oster)
Chapter 3

Demand, Supply, and Market Equilibrium
3.1

Firms and Households: The Basic Decision Making Units
1

Multiple Choice
1)

Michael Dell was the first individual who sold computers by mail order. The company founded by Dell is now one of the largest and most successful computer companies in the United States. Michael Dell would be classified as a(n)
A)

entrepreneur.
B)

opportunist.
C)

monopolist.
D)

socialist.
Answer:

A
Diff: 1
Topic:

Firms and Households
Skill:

Conceptual
2)

Firms are organizations that
A)

take advantage of the public.
B)

transform resources into products.
C)

transform outputs into inputs.
D)

consumer outputs.
Answer:

B
Diff: 1
Topic:

Firms and Households
Skill:

Definition
3)

An entrepreneur is a person who does all of the following EXCEPT
A)

assumes the risk of a firm.
B)

organizes and manages a firm.
C)

turns a new idea or product into a business.
D)

always makes a profit.
Answer:

D
Diff: 1
Topic:

Firms and Households
Skill:

Definition
4)

Why do firms engage in the activity of production?
A)

to help society advance technologically
B)

to participate in the circular flow
C)

to acquire profits
D)

to develop a supply schedule
Answer:

C
Diff: 1
Topic:

Market Equilibrium
Skill:

Conceptual
AACSB:

Reflective Thinking

2

True/False
1)

Economists would classify the Boston Symphony Orchestra as a firm.
Answer:

TRUE
Diff: 2
Topic:

Firms and Households
Skill:

Conceptual
AACSB:

Reflective Thinking
2)

Households are the consuming units of the economy.
Answer:

TRUE
Diff: 1
Topic:

Firms and Households
Skill:

Definition
3)

Entrepreneurs are unnecessary in a market economy and their profit is