Practice Quiz

FSOT Full Test Bank - Question List

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86. If company A is better than company B at both producing T-shirts and at selling them retail, why might company A contract the first job to company B?
  1. Company B has an absolute advantage at producing T-shirts.
  2. Company A believes it will benefit from future competition.
  3. There is no reason for company to contract out the work.
  4. Company B has a comparative advantage at producing T-shirts.
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87. What is a product’s equilibrium price?
  1. Its production cost
  2. The per unit cost, excluding overhead
  3. The price that is equal to its inherent value
  4. The price at which supply and demand are equal
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88. As production volume increases, the marginal cost a manufactured good usually decreases. What is the reason for this?
  1. The fixed cost is spread over more units.
  2. The factory becomes more efficient.
  3. New workers will accept lower wages.
  4. To account for reduced marginal utility
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89. If government regulations impose price controls on wheat, and if the production cost of wheat then exceeds that price, what is the most likely result?
  1. There will be a wheat shortage.
  2. Wheat sellers will lose money.
  3. Wheat sellers will sell to retailers below market value.
  4. Wheat sellers will see their profits grow.
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90. Why is there a discrepancy between long-term and short-term effects of a change in demand?
  1. The market is slow to understand most changes.
  2. The market waits to see if the change is permanent.
  3. Equilibrium situations always take time to settle down.
  4. There is a cost associated with adapting to the market.
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