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Chapter 1 Test Internet Sample

True/False
Indicate whether the sentence or statement is true or false.
 

 1. 

Once set, people's values remain the same throughout their lives.
 

 2. 

Needs are the things you can't live without while wants are the things that you would like to have but can live without.
 

 3. 

As people pass through stages in their life cycles they often change their goals.
 

 4. 

The decision making process helps you make buying decisions in an organized, logical manner.
 

 5. 

According to the law of demand, consumers will demand less of a product at a lower price than at a higher price.
 

 6. 

Businesses rarely pass the cost of advertising on to consumers in higher prices.
 

 7. 

An ad that accidentally misleads consumers is an example of deceptive advertising.
 

Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
 

 8. 

A purchase made on a whim without using a decision making process is a(n) ____.
a.
trade-off purchase
b.
impulse purchase
c.
option purchase
d.
opportunity purchase
 

 9. 

An economy in which the government tells you what to produce is a description of a ____.
a.
mixed economy
b.
command economy
c.
market economy
d.
traditional economy
 

 10. 

Some primitive tribes in remote areas still live in ____.
a.
command economies
b.
mixed economies
c.
traditional economies
d.
market economies
 

 11. 

The fact that U.S. businesses and consumers are able to make most economic decisions within limits set by the government shows that this country has a ____.
a.
command economy
b.
market economy
c.
traditional economy
d.
mixed economy
 

 12. 

The quantities of a product that producers are willing and able to make available for sale at various prices over a given time period is said to be ____.
a.
surplus
b.
supply
c.
demand
d.
shortage
 

 13. 

Advertising that tries to win your favor by comparing its product's qualities to those of a competing product is called ____.
a.
persuasive advertising
b.
comparative advertising
c.
brand advertising
d.
informative advertising
 

 14. 

Advertising that is designed to appeal to your emotions to influence you to buy is called ____.
a.
defensive advertising
b.
persuasive advertising
c.
comparative advertising
d.
informative advertising
 

 15. 

Advertisements that are intended to take advantage of consumers by including factually incorrect statements are ____.
a.
legal
b.
puffery
c.
comparative advertising
d.
deceptive advertising
 

 16. 

The equilibrium price for a product is the price at which the quantity supplied is ____.
a.
more than the quantity demanded
b.
less than the quantity demanded
c.
exactly equal to the quantity demanded
d.
none of the above
 

 17. 

The advertising that provides information that helps you make a good buying decision is called ____.
a.
comparative advertising
b.
informative advertising
c.
persuasive advertising
d.
defensive advertising
 

 18. 

One day while shopping with some friends, without thinking you decide to buy a new computer game with money you had intended to use for a new pair of shoes. This purchase is an example of a(n) ____.
a.
buyer's remorse
b.
rational buying decision
c.
need
d.
impulse purchase
 

 19. 

Every country must deal with the situation in which consumers' wants are greater than the resources available to satisfy those wants. This situation is known as ____.
a.
law of demand
b.
scarcity
c.
production
d.
law of supply
 

 20. 

One night while watching television, you see an advertisement explaining the technical aspects of operating a particular type of digital camera. You now feel more comfortable about using the product and decide to purchase it. This type of advertising is known as ____.
a.
informative
b.
brand
c.
comparative
d.
persuasive
 

 21. 

Now that Denise has her first job, she needs to purchase a few new items of clothing. Before going to the mall, Denise identifies the types of clothes she will need and the amount she can afford to spend. She then plans specific steps to gather information about the clothing that she wants. Denise's buying process could best be described as ____.
a.
impulse buying
b.
rational buying
c.
random buying
d.
none of the above
 

 22. 

For several generations Joaquin's family has produced and then sold beautifully handcrafted baskets in the local market. The basket-making skill is passed down from one generation to the next. Joaquin's family custom is an example of what type of economic system?
a.
market economy
b.
mixed economy
c.
demand economy
d.
traditional economy
 

 23. 

Elisa has decided to start her own business selling handmade rag dolls. She buys the dolls for $5 each from women who make them in her community. She then sells them to tourists for $9 from a stall she rents at a local market. If she subtracts the cost of renting the stall and buying the dolls from the money she earns selling dolls she will determine her ____.
a.
profit
b.
opportunity cost
c.
demand
d.
resources
 

Completion
Complete each sentence or statement.
 

 24. 

The value of your next best alternative whenever you make a choice is called the _____________________.
 

 

 25. 

The study of the role consumers play in an economic system is _____________________.
 

 

 26. 

Gina wants to complete an associate's degree from a local business college within the next nine months. In order to achieve her goal, she must become a full-time student and attend classes from 8 a.m. until 3:30 p.m., Monday-Friday. This will force her to give up her full-time job and the income it provides. However, she knows that in the long run this sacrifice will help her reach her goal. The income she gives up is known as her _____________________.
 

 

Short Answer
 

 27. 

Suppose members of a new musical group all wear bright orange leather jackets. The group becomes very popular and many people try to dress just as they do. Explain what would happen to the demand and equilibrium price for bright orange leather jackets if this happened.
 



 
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