Unit 3 Markets and Competition Study Guide Coach Lott

Unit 3 Markets and Competition Study Guide Coach Lott

Multiple Choice

Identify the choice that best completes the statement or answers the question.

1.

According to the illustration, what is the least common form of business organization in the United States?

proprietorships / joint ventures
corporations / partnerships

2. What letter on the graph represents the proper location for the market structure “oligopoly”?

Z / X
Y / W

3. What letter on the graph represents the proper location for the market structure “monopoly”?

X / Z
W / Y

4. How could the Chinese economy be characterized?

mixed, but on the side of free market
centrally planned
free market
mixed, but on the side of centrally planned

5. Which of the following is NOT a form of non-price competition?

physical characteristics / location
advertising / discounts
Characteristics of Market Structures
Market Structure / Number of Firms
in Industry / Influence over Price / Entry into
Market
P / Few / Some / Difficult
Q / One / Extensive / Almost Impossible
R / Many / None / Easy
S / Many / Limited / Easy

6. “Pure monopoly” should replace what letter in the table?

S / P
Q / R

7. What market structure does the letter “R” in the table represent?

perfect competition / pure monopoly
oligopoly / monopolistic competition

8.

Where would the U.S. economy be located in the diagram, in W, X, Y, or Z?

W / Y
Z / X

9. A merger of corporations involved in different steps of manufacturing or marketing is known as a

multinational merger. / conglomerate.
horizontal merger. / vertical merger.

10.

PepsiCo, Inc.
Employees / 151,000
Location of Operations / PepsiCo sells soft drinks in approximately 170 countries, snack food in more than 100 countries, and juices in approximately 23 countries.
Source of Profits / Pepsi-Cola ($992 million) 35%
Frito-Lay ($1.791 billion) 64%
Tropicana Products, Inc. ($40 million) 1%
Selected Products / Soft Drinks: Diet Pepsi, All Sport, Mountain Dew, Pepsi One, Pepsi-Cola, Slice, Lipton Teas, Aquafina
Snack Foods: Cheetos, Doritos, Fritos, Lay’s, Ruffles, Sabritas, Santitas, Tostitos, Rold Gold pretzels
Juices: Tropicana Pure Premium, Tropicana Twister, Dole Juices, Fruvita Juices
Market Shares / Soft Drinks: 33% of the U.S. market
Snack Foods: 60% of the U.S. snack chip industry
Juices: 70% of not-from-concentrate juice market in U.S.
Source: PepsiCo, Inc. Annual Report, 1998.

Based on the table, what type of product does PepsiCo sell in the most countries?

juices / not-from-concentrate juices
snack foods / soft drinks
Nonfarm Sole Proprietorships in the United States
(approximate figures)
Total Number of Sole Proprietorships / 16,154,000
Percent of Sole Proprietorships Engaged in Different Types of Activities / Forestry and fishing / 2%
Mining / 1%
Construction / 1%
Manufacturing / 3%
Transportation / 4%
Wholesale and retail / 18%
Finance, insurance, real estate / 9%
Services / 50%
Other / 12%
Total receipts (in millions) / $790,630
Net income (in millions) / $166,799

Source: Statistical Abstract of the United States.

11. Suppose you ranked the 9 activities of sole proprietorships shown in the table. The most common activity would be rank 1 and the least common, rank 9. What rank would you give to wholesale and retail activities?

rank 1 / rank 2
rank 3 / rank 4

12. Based on the table, approximately what number of sole proprietorships are engaged in mining?

1,615,400 / 3,230,800
323,080 / 161,540

13. Which of the following is NOT a key economic question?

Who consumes these goods and services?
How should these goods and services be produced?
How should it be ensured that goods and services are paid for?
What goods and services should be produced?

14. What is one kind of monopoly that the U.S. government generally permits?

certain kinds of medications / the telephone company
professional sports leagues / low-price gasoline

15. All of the following are characteristics of a command economy EXCEPT

it can change direction drastically in a brief period of time.
public services are available at little or no cost.
it provides workers with few incentives to work hard.
it is not designed to meet the wants of consumers.

16.

Based on the graph, the top 4 companies in the soft drink industry produced what percentage of all soft drink output?

87% / 90%
82% / 85%

17. What is monopolistic competition?

one company selling the identical product under different names
one company selling several different products under different names
many companies selling similar but not identical products
a very few companies selling identical products

18. When a major car company lowers its prices, other car makers will probably

go out of business. / lower their prices.
raise their prices. / maintain existing prices.

19. Perfect competition is characterized by all of the following EXCEPT

well-informed buyers and sellers. / a large number of buyers and sellers.
identical products. / sellers acting together to set prices.

20.

What type of merger created Mega Corporation in the illustration?

conglomerate merger / horizontal merger
vertical merger / diagonal merger

Essay

21.

Making Comparisons Compare a command economy to a market economy by listing a strength and a weakness of each. State how each type of economy satisfies the wants and needs of individuals.

22.

Making Comparisons How do competition, product variety, and price vary between monopolistic competitors and a monopoly?