Question 7 On average each year, about 7 percent of all firms in the United Stat
ID: 1101770 • Letter: Q
Question
Question 7
On average each year, about 7 percent of all firms in the United States are new and 1 percent go out of business. According to the text, luck may play a role. Which of the following reasons for failure might be attributable to luck?
An individual undertakes a very risky venture so that his product is first to market.
An executive fails to undertake an investment that would have yielded great success.
An executive focuses on the incorrect objective.
An executive undertakes an investment just prior to a major natural catastrophe that destroys the firm's assets.
An executive fails to perceive what customers really want.
3 points
Question 8
To an economist, the word 'marginal' means:
total.
average.
next or additional.
sunk.
none of these choices.
3 points
Question 9
All the costs of a transaction are referred to as
transfer costs.
transactions costs.
marketing expenditures.
accounting costs.
3 points
Question 10
Data suggest that which of the following are necessary for high rates of economic growth?
private property rights.
free markets.
clear incentives.
all of these choices.
3 points
Question 11
In international trade the concept of 'relative opportunity cost' refers to
absolute advantage.
comparative advantage.
technical costs.
institutional advantage.
3 points
Question 12
Property rights
only need to be found in wealthy segments of the population.
need to be universal.
do not promote incentives.
do not promote efficiency
3 points
Question 13
The cost of a choice is
the price of the product selected.
the price of the product not selected.
the next best opportunity.
all of the opportunities given up.
3 points
Question 14
Trade is promoted by
having a self-interested population.
proper incentives.
the presence of property rights.
all of these choices.
3 points
Question 15
A negative externality occurs when
there is rent-seeking.
benefits are imposed on individuals that are not part of a transactions.
there is creative destruction.
costs are imposed on individuals that are not part of a transaction.
3 points
Question 16
Asymmetric information includes the concepts of
moral hazard transfer costs.
adverse selection and public goods.
adverse selection and moral hazard.
negative and positive externalities.
3 points
Question 17
Chickens are not endangered because
there are clear property rights to them.
government regulates chicken processors.
there are positive externalities.
they are free and not owned by anyone.
3 points
An individual undertakes a very risky venture so that his product is first to market.
An executive fails to undertake an investment that would have yielded great success.
An executive focuses on the incorrect objective.
An executive undertakes an investment just prior to a major natural catastrophe that destroys the firm's assets.
An executive fails to perceive what customers really want.
Explanation / Answer
7. An executive undertakes an investment just prior to a major natural catastrophe that destroys the firm's assets.
8. next or additional.
9. transactions costs.
10. all of these choices.
11. comparative advantage
12. need to be universal.
13. the next best opportunity.
14. all of these choices.
15. costs are imposed on individuals that are not part of a transaction.
16. adverse selection and moral hazard
17. there are clear property rights to them.
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