ECO561 Week 1 Quiz Answers. Online MBA Degree University of Phoenix. Answers to the Week 1 Quiz in ECO561 in the Online MBA Degree Program at University of Phoenix. Objective 1.1: Choose methods to increase revenue in an organization Each individual has a budget line which they follow for expenditures. If the income of the individual increases what is the effect on the budget line? An increase in the money income shifts the budget line to the right.* An increase in the money income shift the line to the left
An increase in the money income causes movement along the curve There is no change in the budget line when money income changes. Rejoinder: When more income is earned the demand for goods will shift to the right as more goods and higher levels of goods are demanded across the board. The budget line follows the law of demand as it shifts to the right showing an increase in the quantity demanded of items. This should not be confused with movement along the curve which is caused by a change in price of a specific good. The purpose of a market system is____?
To allow government to control what is sold.
To set constraints between buyers and sellers.
To bring buyers and sellers into contact *
d. To allow an organization to set prices in relation to their products. Rejoinder: In the market system an exchange of money for goods and or services takes place. A true market system sets the price through barter where the goods and services sell for the best price offered by the buyers creating equilibrium. For this exchange to take place the market serves as a meeting place for buyers and sellers. If the organization sets its prices there may not be market equilibrium and that can result in either a shortage or a surplus. By specializing in the production of one good a company is able to benefit from economies of scale which increases their revenues. Attributes of specialization include Reducing costs by creating a surplus.
Saving time by allowing a worker to focus on one task.*
Encouraging workers to learn new skills.
Encouraging workers to learn a number of different skills.
Rejoinder: Specialization occurs when a firm is able to use the resources available to it to produce one product or family of products rather than trying to produce multiple goods and spreading the firm’s resources in many directions. By focusing or concentrating on one task workers can achieve a higher level of training in that skill and become more productive. Firms always strive to produce only the amount of product they can sell to maximize their profits. The market system promotes progress by
a, Creating incentive to continue to do things in the same way b. Restricting the amount of capital directed to specific goods. c. Slowly adjusting to changes in the in the prices of resources. d. Providing incentive for technological advances. *
Rejoinder: Because firms are competing for consumers’ dollars they always want to have the newest and latest product available which will be the most advanced in their category and appeal to consumers as new purchases. This provides incentive to stay ahead of the competition in developing new technology. If a firm continues without advancing its product the competition that do advance will attract their customers which is why firms dedicate resources to research and development. Revenue increases when
producer surplus increase*
producer surplus decreases
consumer surplus increases
consumer surplus decreases.
Rejoinder: Producer surplus is the difference between the minimum price the producer is willing to receive and what they actually receive. The surplus is their profit and the larger the surplus the greater their profit on the good. When it decreases they are receiving a price closer to their minimum acceptable. The consumer surplus measures what the consumer is willing to pay and its difference from the market price. The closer to the market price...
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