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Module 3 Review Guide

Entrepreneurs people who take the risks associated with starting a new business and formulate
new ideas. Example... Howard Schultz and Starbucks. (Module 3.01 page 1) Most Entrepreneurs
share the characteristics of HUNT (3.01 page 2):
H Harness your vision

Take your idea and really think it out. What do you want to accomplish? What
resources will be required?

U Underestimate the

Prevent barriers from stalling action. Find ways around the barrier whether it is
money, discouragement from others, or time.

N Network

Find and acquaint yourself with people who can help turn your vision into reality.
Networking with other people can make roadblocks disappear.

roadblocks

Take the first step

Acting on your vision starts with a single step, and the first is the most difficult.
However, once you do, you are more confident to take the second.

Entrepreneurs and their contributions (3.01 Page 2):


Entrepreneur

Contributions

An Wang

Chinese-American computer scientist who held more than 35 patents. Hisdevelopments


were critical to advancing digital information technology that we depend on today
Wang Laboratories created one of the first desktop computers
One of the first self-made African-American millionaires
was an early entrepreneur in the beauty industry that today garners billions of dollars in
annual sales
It is because of him that Starbucks has over 6,000 stores worldwide today
His drive and marketing skills have made the caf latte a daily habit for many Americans
Launched the first chain of department stores in the United States, commonly known as
Penneys Today Americans visit over 1,000 "Penneys" or use the mail order and online
catalogs to purchase various household goods and clothing.
Patented the telegraph in 1849.
paved the way for long-distance communication, reshaping America literally in terms of
westward expansion, railroad safety, and business efficiency
Reshaped the American South from a society heavily focused on cotton agriculture to one
that grew diverse crops and utilized crop rotation
taught these techniques for 47 years at the Tuskegee Institute
discovered a number of uses for peanuts that are in many products we use to this day
Father founded Goya Foods, distributor of Hispanic foods
under Josephs direction Goya Foods became the largest U.S. Hispanic-owned food
distribution company in the United States
First woman in the US to earn a doctorate in chemical engineering
designed the first commercial penicillin production plant
her work made it possible to produce and distribute penicillin widely, expanding Americans'
access to the antibiotic drug that can cure many formerly life-threatening bacterial illnesses
Cofounder of kiva.org
site allows people to give microloans to people in developing nations to help them start
or expand a business
Cofounders of Google.com and started in 1989 out of the dorm rooms in college. Most used
search engine in the world. Enables people to search text, images, and videos.

Madame C.J.
Walker
Howard Schultz
James Cash Penney
Samuel F.B. Morse
George
Washington Carver
Joseph A. Unanue
Margaret
Hutchison
Rousseau
Jessica Jackley
Larry Page and
Sergey Brin

Factors of Production All the resources necessary to produce goods and services (3.02 page 1)
Entrepreneurship - Intelligence, imagination, and ability to take the risks that are needed to
start up and maintain a business, a component of labor - puts his/her money and ideas into
starting a new business- this is a risk - business owners, managers, people who come up with
advertising ideas (3.02 page 2)
Capital goods - The tools humans create to make the business more efficientfinancial and
physical - truck, computer, cash register (manmade objects) Investments in capital goods aim to
increase productivity - buying new machinery or training workers are examples
(3.02 page 2)
Land - All the natural physical resources necessary to your product or service -oil, wood, water
(natural resources) (3.02 page 2)
Labor - The human work that goes into the businessphysical and mental skills - the workers,
employees (3.02 page 2)
Here are the resources needed to open a flower delivery business. Match each factor of production with the correct
category listed in the chart. Factors: delivery truck, floral designer, wedding planner, ensuring safety regulations,
cello wrap, webmaster, dirt, sunshine, packaging materials, choosing store location, flower farmer, hiring floral
designer, computer, credit card swiper, filing for business permit, flowers, water, advertising wedding service,
delivery truck, driver

Land

Labor

Entrepreneurship

Capital

How to Organize a Business


Sole proprietorship- one owner, most popular form of business. One owner makes all
business decisions, but this does not protect against losing personal assets (3.03 page 2)
Partnership-two or more owners share the in making decisions and share the risks and benefits
of owning and running a business. Partnership does not protect against losing personal assets
but divides the risks between 2 or more owners. (3.03 page 2)
Limited Liability Company- a type of corporation; Protects personal assets. Personal assets
cannot be used to pay-off debts; no problem of double taxation. Protects personal assets but
you maintain control of all decision making. (3.03 page 2)
Corporation- stockholders and bondholders; easy to get more money and to expand; hard to
start and stop (imagine the time it would take to stop Walmart if it went bankrupt). Protects
personal assets but you lose control in decision making process. (3.03 page 2)

Market Structures/Levels of Competition

Least Competitive------------------------------------Most Competitive

Price vs. Non-Price Competition


Price Competition the lowest price gets the sale. In a monopoly, the company has the advantage, since they have no
competition and can set the price at whatever they want. In a pure competition, the customer has the advantage and will
always go with the lowest price.
Non-Price Competition factors other than price can effect consumer decisions.
Advertising is a non-price way to compete (rather than lowering prices, a company will advertise to raise sales)
Strategy
Description
Example/Explanation
Highlights a negative Advertisement: Do you know whats lurking in your closet? Protect your sensitive
Fears
outcome with or
skin with all organic, hand crafted, Sensitive Brand T-shirts! Why risk the only skin
without the product
you have? All those other shirts contain fabrics that could make you break out or
worse! Not with Sensitive! Consumer: Wow, Id better buy the organic cotton
clothing instead; I might get a rash from the other fabrics.
implies the product
Advertisement: Wow, you really blew it big time! You forgot your girlfriends
Emotions
will help the user to
birthday again. Dont feel bad; Just in Time Flowers is here to save the day when you
avoid negative
cant! Were here for you when you need to say sorry the most. Consumer: I feel
feelings or increase
bad I forgot my girlfriends birthday; I should send her flowers to make it up to her.
positive feelings
encourages people to Advertisement: Who says you cant always look and feel your absolute best! Come
Rituals
make the product a
to Diva Salon where our motto is TGISD Thank Goodness its Spa Day!
part of their daily
Consumer: I love Diva! Whenever I get my haircut I always have them blow dry
routine with words
and style it; its totally worth the extra five dollars.
like always
Senses
appeals to one of the Advertisement: Remember sneaking one of grandmas famous ooey gooey cookies
five senses
before dinner? Even getting caught was worth it! Grammie's Fabulous Cookies bring
back your childhood memories of those soft, sweet cookies, and we promise we
wont tell even if you have one for breakfast. They look so delicious, youd swear you
could smell grandmas oven. Consumer: Ooh, those look so good! I have to have
some!
Advertisement: Youve got the car, youve got the girl, youve even got the look. So
Social Values encourages use of
products that are
whats missing? A Powerchord Guitar is the ONLY accessory youll ever need.
popular or will
Forget all that other stuff. As long as youre rocking on a Powerchord, youve got
improve social status cool made. Consumer: Powerchord is so awesome. I've got to have one.
People would think I was cooler if I played the guitar."

Marginal Cost Analysis


When producing goods and services, producers must answer the 3 basic economic questions.
Marginal cost analysis refers to how much they should produce. To determine this, they need to
find the marginal cost and marginal revenue for a product market.
Marginal Cost cost of producing one additional unit of a good or service (blue line)
Marginal Revenue revenue gained with the production of one additional unit of a good or
service (yellow line)
Due to fixed costs, the first unit is more expensive to produce than additional units, causing
marginal costs to fall. At some point, the curve shifts upward because of the Law of Diminishing
Returns at some point adding resources will result in less output per additional unit of a product.
(blue line)

Business owners aim to minimize costs and maximize profits (do not hire workers or add capital
unless it creates a profit). Producing where marginal cost is closest to marginal revenue
without exceeding it will maximize the firms profits. Firms can calculate this using the chart...
Quantity
of Video
Game
Systems

Price (in
whole
dollars)

0
1
2
3
4
5
6
7
8
9

252
246
240
234
228
222
216
210
204
198

Total
Revenue
Quantity x
Price

Marginal
Revenue the
change of
revenue for the
addition of one
unit
0
0
1 x 246 = 246 246 0 = 246
2 x 240 = 480 480 246 = 234

Total Cost
Fixed +
Variable
Costs

Marginal Cost
The change of
cost for the
addition of one
unit

Profit (or loss)


Total Revenue
Total Cost

210
408
564
642
684
774
1080
1410
1776
2178

n/a
408 210 = 198
564 408 = 156

0 210 = -210
246 408 = -162
480 564 = -84

Labor Market
In the market for labor, workers are the supply and employers represent demand
Sometimes there is a change in the demand for labor.
Imagine a downturn in the economy. Businesses are
not selling as much and dont need as many workers.
Demand for labor has decreased. (Shift from D1 to
D2). The equilibrium also moves from point A to
point B (change in quantity of labor supplied) which
lowers the equilibrium price (wages) of labor.
An employer will choose how many workers to hire
and how much to pay them at a level that minimizes
costs and maximizes benefits, or profits.
In this case, the demand for labor has decreased,
along with a decrease in the quantity supplied and a
lower equilibrium price (lower wages offered).

There are many other factors that can influence a business owners decisions about wages and
benefits...
education and skills required
supply and demand for the job
training provided by employer
worker productivity
expected business revenues
size of the company

Assume a fast-food place has enough resources to


produce pizza and spaghetti along Curve R. The
relative number of each produced every day is
determined by supply and demand. The restaurant, of
course, is most efficient when it produces about 12
pizzas and 7 plates of spaghetti (Point C).
However, if two of their workers fall ill and take the
day off, their resources are down. The restaurant
may only be able to produce pizzas and spaghetti
at quantities along Curve S.
If the restaurant hires another worker, makes a
good deal for cheaper noodles, or purchases an
automatic cheese slicer the production
possibilities may increase to Curve T or beyond.

Module 3 Vocabulary
Term
Advertising
An Wang

Definition
A form of non-price competition. Uses fears, emotions, social values, and
rituals to appeal to potential buyers.
Chinese-American computer scientist who held more than 35 patents
developments that were critical to advancing digital information technology
that we depend on today.

Anderson, Tom

He co-founded MySpace with Chris DeWolfe. He focused on the creative


energy behind MySpace--developing features and the look of the website.

Assets

Valuable physical goods.

Capital goods

The tools humans create to make the business more efficient financial, and
physical. For a bakery this would include the oven, delivery truck, mixing
bowls, building, etc.

Capital Investment

Investments meant to increase productivity. Example: training sessions or a new


computer system.

Carver, George Washington

He reshaped the American South from a society heavily focused on cotton


agriculture to one that grew diverse crops and utilized crop rotation and
discovered many different uses for peanut butter.

Collusion

Making agreements, often in secret. For example: two dominant firms work
together to set prices in an oligopoly.

Emotional - Advertisement
Technique

Type of business with stockholders and bondholders; easy to get more


money and to expand; hard to start and stop. Most expensive of the four
business types to start up.
He co-founded MySpace with Tom Anderson. Under his leadership,
MySpace grew from nothing to a website boasting millions of users and
millions
of sad
dollars
in income.
Makes you
or makes
you laugh to try to get you to buy their product.
Example: Adds for pet shelters or raising money for hungry children.

Entrepreneur

A person who takes financial risk to try new business ideas.

Entrepreneurship

Intelligence, imagination, and ability to take the risks that are needed to
start up and maintain a business, a component of labor.
All the resources necessary to create a good or service - land, labor,
capital, and entrepreneurship.

Corporation
DeWolfe, Chris

Factors of Production

Financial capital

Makes you scared something bad will happen if you do not purchase this
product. Example: Use Ultra Max Deodorant! Don't be the stinky kid at the
lunch table!
The funds to pay for all other resources in a business.

Fixed Costs
Horizontal Merger

Costs that do not change from month to month. For example rent.
When a company buys it's competition. Example: If Publix bought Winn-Dixie

Fear - Advertisement
Technique

Jackley, Jessica
Labor

She is the cofounder of kiva.org site. This business allows people to give
microloans to people in developing nations to help them start or expand a
business.
The human work that goes into the businessphysical and mental skills.

Land (factors of production)

All the natural physical resources necessary to your product or service water,
wood, oil, etc.

Law of Diminishing Returns

At some point, adding resources will result in less output per additional unit of
product (it costs less to produce something up to a certain point). This is the
reason for the oddly shaped curve.

Limited Liability Company

A type of corporation; no worry to have to use personal assets to pay-off


debts; no problem of double taxation.

Marginal
Marginal Cost
Marginal Revenue
Market Types
Maximum profit

Means additional
Is computed by finding the difference of previous two quantities for total cost
(total cost of pair #2 - #1).
Is computed by finding the difference of the previous two quantities (total revenue
of pair
#2 - #1). Oligopoly, Monopolistic Competition, Purely Competitive. Least
Monopoly,
competitive to most--monopoly, oligopoly, monopolistic competition, and pure
competition.
Producing where marginal cost is closest to marginal revenue without exceeding
it will maximize the firms profits.

Mergers

Occurs when two businesses form into one. Ways firms attempt to gain
more control of the product market. Can be horizontal or vertical.

Monopolistic Competition

Market structures where many businesses produce similar but not exactly the
same products. This market has relatively few barriers to entry. Rather than work
together to set the price, many producers compete actively against one another
to gain consumers. Pros: Consumers have more choices. Cons: Difficult for
firms to present their products as unique.

Monopoly

Market structure where a single business dominates a product or service. The


least business competition. Monopolies are least beneficial for consumers. Most
beneficial to owners. It has high barriers to entry, meaning it is difficult to
become and stay the sole producer of a good or service. Pros: Firm has pricesetting ability. Cons: Consumers have only one option.

Morse, Samuel F.B.


Non-price Competition

He patented the telegraph in 1849 and paved the way for long-distance
communication, reshaping America literally in terms of westward expansion,
railroad safety, and business efficiency.
The goal of non-price competition is to get buyers to notice and purchase
your product over other similar products regardless of price.

Oligopoly

The market is dominated by few firms who can exert control over the
market for their products, often working together to determine price and
production quantity. Pros: Firms can work together to control market.
Cons: Very difficult for non-dominant firms to grow and compete.

Partnership

Two or more owners. Shared responsibility and profits. Each partner is liable
for all the businesss debts. Partners increase the resources available for the
business and allow the opportunity for dividing the work.

Penney, James Cash

He launched the first chain of department stores in the United States, commonly
known asPenneys.

Perfectly Elastic Demand


Profit or Loss
Purely Competitive
Ritual - Advertisement
Technique
Rousseau, Margaret Hutchison

Schultz, Howard

The demand curve is horizontal, meaning people will only demand a good at a
specific
price level.
Total Revenue
Total Cost
Market structure where many businesses produce a standardized product. This
market is easy to get into and get out of as a business owner. Most beneficial
for consumers. Least beneficial for owners. Pros: Consumers have plenty of
knowledge of similar products.
Cons:
have
to nothings
control
of the
market.
Example:
Oranges,
peanuts,
Buy it Firms
because
it islittle
the way
should
always
be done.
Example:
Easter
squash,
etc.
isnt complete without a Coco-bunny Easter egg!
She designed the first commercial penicillin production plant. Her work made it
possible to produce and distribute penicillin widely, expanding Americans'
access to the antibiotic drug that can cure many formerly life-threatening
bacterial illnesses.
His drive and marketing skills have made the caf latte a daily habit for many
Americans; it is because of him that Starbucks has over 6,000 stores
worldwide today.

Social Values - Advertisement


Technique

Makes you want to do something because everyone else is. Example: All cool
teens wear Chucko-bucko shoes - so should you!

Sole Proprietorship

Everything is controlled by the single owner. The owner makes all the profits
and makes all the choices. However, the owner is also the single person
responsible for debts and challenges. Everything about the company belongs to
the sole proprietor. Least expensive and easiest of the four business types to
start up.

Total Cost
Total Revenue

Fixed Cost + Variable Cost


Quantity x Price

Types of Businesses

Limited liability corporation, sole proprietorship, partnership, corporation


His father founded Goya Foods, distributor of Hispanic foods. Under
Josephs direction Goya Foods became the largest U.S. Hispanic-owned
food distribution company in the United States.

Unanue, Joseph A.
Variable Costs

Costs that change from month to month. For example the electric bill,
water bills, and employee wages.

Vertical Merger

When a business buys the products it sells to lower costs (ex: Lowes buying the
companies that produce lumber, paint, and/or lawn mowers).

Walker, Madame C. J.

One of the first self-made African-American millionaires who was an early


entrepreneur in the beauty industry.

Module 3 Practice Exam


1. What do J. C. Penney and Madame C. J. Walker have in common?
A. They launched major department stores.
B. They were African American entrepreneurs.
C. They were early entrepreneurs in their industries.
D. They were women entrepreneurs.
2. Which of the following are shared by a typical corporation and a limited liability corporation?
A. Easy to start and stop and have shared debt liability
B. Are incorporated and have limited liability
C. Have shareholders and are easy to start and stop
D. Protect personal assets and can sell stock to the public
3. A benefit of a purely competitive market is
A. equal product information for buyers and sellers
B. government sets the product prices to be competitive
C. sellers may set their own prices
D. sellers use advertising to attract buyers
4. "Show your sweetheart how much you love her on Valentine's Day. We're having a sale on all chocolate!" This
advertisement targets your
A. fears
C. emotions
B. senses
D. social values
5. The slope of curve 1 first decreases then increases
because of the Law of
A. Marginal Analysis
B. the Slope of Supply
C. the Slope of Demand
D. Diminishing Marginal Returns

6. This is Pete's PPC curve for staying in touch with


friends via phone vs. his weblog during one week.
Which of the following is a true statement?
A. Pete uses weblog entries more than phone
calls.
B. Pete calls friends more often than he
writes weblog entries.
C. When Pete makes six phone calls he has
time for four weblog entries.
D. When Pete writes one weblog entry he has
time for six phone calls.

7. A country needs to decide if it will defend itself


("guns") or feed its population ("butter"). Look at
the graph. Construct a plan to help the country
attain Point X.
A. Add more gun makers to the labor force
and decrease the number of butter
makers
B. Streamline production of butter and begin
assembly-line manufacturing of guns
C. Decrease the quality of guns and increase
the demand for butter
D. Increase the quality of the butter and
create more demand for guns
8. Use this image to answer the following question.
The ice cream shop needs five pounds of
strawberries for every gallon of strawberry ice
cream. The shop chose to produce four gallons of
chocolate ice cream. How many pounds of
strawberries should the shop purchase?
A. 24
B. 30
C. 40
D. 60

9. Which of the following is the least profitable investment for a cell phone company earning $10 per plan contract?
A. Offering free $10 gift for every new plan, generating 40 new plans per day
B. Opening a new store location with $200 daily operating cost, generating 30 new plans per day
C. Redesigning website at $50 daily operating cost, generating 10 new plans per day
D. Creating television commercial at $25 daily operating cost, generating 15 new plans per day
10.Which of the following is an example of capital in a pizza shop?
A. Dough
B. Pizza Oven

C. Workers
D. Tomatoes

11.Your friends opened a restaurant. A necessary labor resource would be?


A. Servers
C. Oven
B. Building
D. Tables and chairs
12.You would like to direct all activities in a business that you start. What would be the best option for you?
A. Partnership
C. Sole Proprietorship
B. Limited Liability Company
D. Corporation

13.Differentiate between land resources and labor resources that a business would need.
A. Land resources include items that have to come from land such as oil, gold, water, and paper, but labor
resources include human beings in their specific employee role.
B. Land resources will include items that can be used on land such as trucks, trains, and tractors, but labor
resources will include the actual working on the land.
C. Land resources will include all items that will take up land space such as buildings, parking lots, and barns yet
labor resources will include the actual working on the land.
D. Land resources will include items that can be made from land or are taking up land such as trees, buildings, and
stores, but labor resources include human beings in their specific employee role.
14.A business owner has several competitors in his area. She is not willing to change the price on her product. She plans to
strengthen her competition with them via other routes. Predict one way in which she will do this:
A. She will lower her price.
B. She will raise her price.
C. She will close her store.
D. She will purchase additional advertising
15.Tom has been renting a booth at the Flea market for 10 years. They are raising the rental fee to $10 per hour. He sells
pirate coconuts for $5 each. How many pirate coconuts does he need to sell in one hour to earn a profit?
A. 2
C. 4
B. 3
D. 5
16.You are starting a Tree trimming business. Which of the following would be a needed land resource?
A. Oil
C. Ladder
B. Chainsaw
D. Trees
17.Why does pure competition benefit consumers over producer?
A. Companies control price through demand.
B. Competition is driven by price.
C. Supply influences production more when competition is less.
D. With a small amount of producers they have control of the prices.
FLVS classes to answer the following question.
Andy needs about 4 hours per week for each
FLVS class. If he decides to do to 8 hours of
gamming each week, how many hours will he
spend on his classes if working efficiently?

A.6
B. 16
C. 4
D. 20
18. Use this image showing the production
possibilities curve for hours of gamming and
19.You and your best friend open a dog walking business together. Identify how your business will be classified and the
capital you would need for your business
A. Sole proprietor and dogs
C. Partnership and employees
B. Sole proprietor and water
D. Partnership and a dog leash

20.Your dog walking business has become a great success. You and your best friend want to maintain control of the
business, but protect your personal assets/property. Which of the following would best suit your growth
A. Limited Liability Company
C. Corporation
B. Monopoly
D. Sole Proprietor
21.You and your best friend decide to hire someone to help with the dog walking business. You pay your new employee
$8 an hour and you currently charge $10 for 1 walk a day. Which of the following would be the most profitable for
your business?
A. New employee will work for 2 hours a day and walk 2 dogs
B. New employee will work for 3 hours a day and walk 4 dogs
C. New employee will work for 5 hours a day and walk 6 dogs
D. New employee will work for 7 hours a day and walk 7 dogs
22.Gene decides to open a restaurant, and has plenty of money to put into his venture but has never actually worked in a
restaurant in any capacity. Which would be the most ideal way to organize his business based on this information?
A. Corporation or sole proprietorship
C. Limited liability or corporation
B. Partnership or limited liability company
D. Sole proprietorship or partnership

23.Use the production possibilities diagram of days


spent doing homework and days spent playing
video games to answer the following question.
Tina has 3 hours of spare time each day. How
many hours will Tina have for her homework if
she spends 6 days playing video games?
A. 1
B. 3
C. 4
D. 10

24.If Bob wants to open a Burger restaurant, which of the following would be necessary capital resources?
A. Restaurant manager, cash register, water
C. A location for the shop, burgers, plates
B. Servers, advertisements, plates
D. Silverware, cooks, coupons in a local flyer
25.Kallis new jewelry store has really started to increase in sales giving Kalli enough money that she can now start looking
at expanding her business to further her success . Keeping in mind that Kalli is using the business structure of a sole
proprietorship, which answer below would be the best one for her to consider?
A. Offering stock options to potential investors
B. Hiring additional staff
C. Expanding her products to include more sizes and designs
D. Moving the business to a larger location
26.Lucas has been seeing a steady increase in sales with his coffee shop. He is considering some different types of capital
investments that should continue to increase his profit line and hopefully allow him to open another store. Which
investment would be the most beneficial to Lucas long term business plan?
A. Hiring more employees
C. Allowing stock options
B. Adding additional coffee machines
D. Increasing his advertising

27.Shirley Marks, a new clothing store in the mall, has just been opened. With new clothing designs, cheaper prices, and
constant sales this new store is a hit! Its also a major competitor with the other stores in the mall. In evaluating the
competition, which category does Shirley Marks fit into?
A. Monopoly
C. Monopolistically Competitive
B. Pure Competition
D. Oligopoly
28.If you were to start your own restaurant, which of the following would be an example of capital?
A. The workers hired to cook and serve
B. The risk taken to open a business
C. The stoves, ovens, tables, and chairs
D. The food needed to cook and serve to paying customers
29.David is looking to open his own business. He has a significant amount of start-up cash but doesnt want to put his
personal assets that he has worked so hard to acquire, at risk if the business was to fail. What would be the best way to
structure his business and why?
A. a sole-proprietorship because it is the easiest and most widely used business structure
B. an LLC because it will differentiate between personal and business assets
C. a corporation because it will allow him to raise capital and only put the money he has invested into the
business at risk
D. a partnership because it will split the risk between him and another person
30.Florida Power and Lights is the only electrical provider in a particular area giving it a theoretical advantage of being able
to set prices as it wants without having to worry about competition. This is an example of which type of industry
structure?
A. monopoly
C. monopolistic competition
B. oligopoly
D. pure competition
31.Which of the companies below would be an example of a natural monopoly?
A. Hillsborough County Utilities (provides water/sewage)
B. Wal-Mart
C. Innerlight Surf Shop (only surf shop on the beach)
D. Comcast (provides cable, internet, phone services
32.Starbucks Coffee has been in Panama City for 10 years. Caribou Coffee now opens it first shop in Panama City and
offers similar products at similar prices but also includes free Wi-Fi and an internet station for patrons without
laptops. How would you characterize this scenario?
A. price competition in a purely competitive market
B. price competition in a monopolistically competitive market
C. non-price competition in a purely competitive market
D. non-price competition is a monopolistically competitive market
33.Use the chart below, determine which of the following statements are true:
A. city utility workers and accountants
require the most education/training
B. accountants and teachers have the least
amount of training
C. accountants are in high demand
D. fast-food cashiers are in high demand

34.(Use the marginal cost analysis graph) What point


on the graph represents a situation where David
is just starting out in his new business and is
burdened by high initial start-up costs with very
little profit in return?
A. Point 1
B. Point 2
C. Point 3
D. Point 4
35.(Use the marginal cost analysis graph) What point
on the graph represents a situation where David
has been operating his business for a few years
and has become extremely efficient and is now
maximizing his profits?
A. Point 1
B. Point 2
C. Point 3
D. Point 4

36.David finds that he has 3 employees that have been stealing food from his restaurant. He fires these 3 employees and
hires two new employees with very good resumes and proven work experience. This is an example of what?
A. entrepreneurship
C. capital
B. labor
D. land
37.Use the chart below to answer the question.
David and his one employee can normally produce around 50
hamburgers an hour. He decides to hire one additional worker
to help increase production. Which day probably represents
that start date of the new untrained employee?
A. Day 1
B. Day 3
C. Day 5
D. Day 7

For answers to the practice exam go to:


http://learn.flvs.net/educator/common/00Schmidt/Module3PracticeExamV14AnswerKey.pdf