Business Management: Real World Applications & Connections

Chapter 6: Economics

TRUE OR FALSE
Please answer the following questions as true or false.


1.	When the price of a product goes down, companies are less willing to supply more of the product.

		A)	True
		B)	False

2.	Payroll is an example of a fixed cost.

		A)	True
		B)	False

3.	Managers tend to pay special attention to leading economic indicators when making decisions about the future of the company.

		A)	True
		B)	False

FILL IN THE BLANKS
The following questions require you to find the correct answer that should appear in the blank.


4.	_____ are determined by subtracting revenues from costs.

		A)	Losses
		B)	Taxes
		C)	Profits
		D)	Prices

5.	The price at which supply equals demand is called the _____.

		A)	coincident index
		B)	equilibrium price
		C)	market price
		D)	value price

6.	The _____ describes the expansion and contraction of many industries at once.

		A)	economy
		B)	recession
		C)	leading index
		D)	business cycle

CONNECT THE PHASES IN THE BUSINESS CYCLE
Match the business cycle to its corresponding effect on workers.


7.	Depression

		A)	Many workers are laid off and wages and benefits are less than desirable.
		B)	Some workers are laid off as businesses cut production.
		C)	Unemployment is low and wages are competitive.

8.	Expansion

		A)	Many workers are laid off and wages and benefits are less than desirable.
		B)	Some workers are laid off as businesses cut production.
		C)	Unemployment is low and wages are competitive.

9.	Contraction

		A)	Many workers are laid off and wages and benefits are less than desirable.
		B)	Some workers are laid off as businesses cut production.
		C)	Unemployment is low and wages are competitive.

MULTIPLE CHOICE


10.	What factor(s) would you have to consider when calculating the opportunity cost of taking a luxury cruise?

		A)	The risk of an accident at sea
		B)	The bills that could be paid with the money used to pay for the cruise
		C)	Both
		D)	Neither