1. What do economists call the situation where a hired manager does not have the same interests as the owners of the business?

a. a financial problem
b. a principal-agent problem
c. conquest and control
d. a financial intermediary problem

2.Goods and services bought domestically but produced in other countries are referred to as

a. imports.
b. foreign consumption.
c. transfer payments.
d. exports.

3.As a form of business, a partnership

a. has limited liability.
b. has only one owner.
c. cannot issue stock.
d. has the most government rules and regulations affecting it.

5. If a demand curve shift to the right, then

a. demand has decreased.
b. quantity demanded has increased.
c. quantity demanded has decreased.
d. demand has increased.

6. A market demand curve reflects the

a. social benefits of consuming a product.
b. external benefits of consuming a product.
c. private benefits of consuming a product.
d. the sum of private and social benefits of consuming a product.

7. In the real world we don't observe countries completely specializing in the production of goods for which they have a comparative advantage. One reasons for this

a. some countries have more resources than other countries.
b. comparative advantage works better in theory than in practice.
c. production of most goods involves increasing opportunity costs.
d. tastes for many traded goods are similar in many countries because of globalization.

8. Which of the following would result in a higher absolute value of the price elasticity of demand for a product?

a. The expenditure on the good is small relative to one's budget.
b. A wide variety of substitutes are available for the good.
c. The time period under consideration is short.
d. The good is a necessity.

9. In Porter's Five Competitive Forces model, "competition from substitute goods or services" refers to

a. competition from producers of substitutes who outsource their production.
b. substitute products that come from foreign competitors in the same industry.
c. substitute products that come from domestic competitors in the same industry.
d. substitute products that come from outside the industry.

10. In order to derive an individual's demand curve for salmon, we would observe what happens to the utility-maximizing bundle when we change

a. income and hold everything else constant.
b. the price of a close substitute and hold everything else constant.
c. the price of the product and hold everything else constant.
d. tastes and preferences and hold everything else constant.