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Name: ________________________ Class: ___________________ Date: __________ ID: A
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Chapter 3 Marketing Begins with Economics
True/False
Indicate whether the statement is true or false.
____ 1. People’s wants and needs are unlimited; in the same way, resources are also unlimited.
____ 2. The cost of resources is the same no matter what economic system a society uses.
____ 3. The United States has many characteristics of a market economy.
____ 4. Individuals who purchase products and services to satisfy needs are producers.
____ 5. If a need or want is particularly important or strong, a consumer might be willing to spend more money
to satisfy it.
____ 6. If consumers believe there is only one product or brand that meets their needs, they will usually be
willing to pay a higher price.
____ 7. When competition is intense—with many businesses offering the same types of products or services—
there are increased opportunities for a business to succeed than when there is little competition.
____ 8. The law of supply states that when the price of a product is increased, less will be supplied; when the
price is decreased, more will be supplied.
____ 9. The point where supply and demand for a product or service is equal is called market price.
____ 10. If a business operating as a monopoly is unregulated by the government, it can charge any price it
chooses. The consumer either pays the price set by the business or goes without.
____ 11. A restaurant in downtown Chicago is a good example of an oligopoly.
____ 12. The demand curve for businesses in monopolistic competition falls somewhere between that of pure
competition and monopoly.
____ 13. Even if they work together, businesses in an oligopoly have little control over price.
____ 14. Products that provide great satisfaction have a higher economic utility, while those providing less
satisfaction have a lower utility.
____ 15. A bank that stays open in the evening is offering place utility to its customers.
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____ 16. The basic economic problem is
a. greed.
b. supply.
c. demand.
d. scarcity.
____ 17. In this kind of economy, the government owns and controls important resources and makes the
decisions about what will be produced and consumed.
a. controlled
b. market
c. free
d. mixed
____ 18. Which of the following is not characteristic of a private enterprise economy?
a. Resources of production are owned and controlled by individual producers.
b. The government controls exchange activities between producers and consumers.
c. Producers use the profit motive to decide what to produce.
d. Consumers use value to decide what to consume.
____ 19. A relationship between the quantity of a product consumers are willing and able to purchase and the
price is called
a. value.
b. scarcity.
c. demand.
d. supply.
____ 20. Marketers are most concerned with
a. microeconomics..
b. megaeconomics.
c. minieconomics
d. macroeconomics.
____ 21. If there is a very large supply of a product, consumers will usually
a. buy as much of the product as they can.
b. place a lower value on it.
c. pay more for it than they usually would.
d. refuse to buy the product at all.
____ 22. Which of the following factors usually would not influence what and how many products or services a
business will produce in a market economy?
a. the possibility of profit
b. the desire to provide employment for as many people as possible
c. the amount of competition
d. the capability of developing and
marketing the products or services
____ 23. What type of situation exists in a market in which many firms compete with products that are
somewhat different?
a. monopolistic competition
b. pure competition
c. an oligopoly
d. a monopoly
____ 24. This type of economic utility results from changes in the tangible parts of a product or service.
a. time utility
b. possession utility
c. place utility
d. form utility
____ 25. When a business offers to sell products to customers on credit, what kind of utility is it offering to
customers?
a. time utility
b. possession utility
c. form utility
d. place utility
Numeric Response
26. A movie theater charges $5 per ticket and averages 300 customers each night. If prices are raised to $7 per
ticket, the theater estimates that average nightly ticket sales will be $1,750. How many customers is the
theater expecting to average each night with the new ticket price?
27. In question 1, what is the percentage change in the average number of customers the theater has each night?
(Express your answer in whole numbers; round decimals up or down).
28. In question 1, what is the percentage change in ticket prices?
29. Elasticity is determined by calculating the ratio of the percentage change in the quantity demanded over the
percentage change in price. Find the elasticity for the situation described in question 1.
Name: ________________________ ID: A
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30. Study the following data for a product:
Price Amount produced Amount demanded
PRICE
QUANTITY SUPPLIED
QUANTITY DEMANDED
$200
100,000
7,000
$100
80,000
35,000
$75
45,000
45,000
$50
30,000
70,000
$20
15,000
90,000
Find the market price.__________________
Completion
Complete each statement.
31. Unlimited wants and needs combined with limited resources equals __________.
32. In a(n) __________ economy, some goods and services are provided by the government and some by private
enterprise.
33. The profit __________ is the use of resources to obtain the greatest profit.
34. __________ is an individual view of the worth of a product or service.
35. Supply is a relationship between the quantity of a product that producers are willing and able to provide and
the __________.
36. All of the consumers who will purchase a particular product or service comprise an economic __________.
37. Economic resources are classified as natural resources, __________, equipment, and labor.
38. A(n) __________ is a kind of market in which one supplier offers a unique product.
39. Economic __________ is the amount of satisfaction a consumer receives from the consumption of a
particular
product or service.
40. __________ utility results from the affordability of the product or service.
Short Answer
41. All economies must answer three basic questions. Name them.
42. What is meant by the term private enterprise?
43. How do consumers make decisions of worth?
44. Summarize the law of demand.
45. Two characteristics are important to determine the type of economic competition in a specific market. Name
them.
46. Explain how economic utility supports the marketing concept.
Essay
47. Explain the relationship between scarcity, wants, needs, and available resources.
48. Briefly summarize the role of government in a private enterprise economy.
49. Explain the basic differences between macroeconomics and microeconomics.
50. What is pure competition? Explain the effect of pure competition on price.