MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) In the story "Voisey's Bay", Inco bought controlling interest in the site upon discovery of one of the world's richest nickel finds. There were delays in development of the site because: 1) _______ A) of a time-consuming and expensive environmental review process, along with difficult negotiations with the government of Newfoundland B) Inco found a richer nickel mine in Malaysia C) Inco closed its Newfoundland office D) Inco didn't have enough capital E) the company could not make a profit 2) Examples of businesses include the following, except: 2) _______ A) large corporations like Canadian Pacific or Alcan Aluminum B) one-person businesses, like barbershops C) local supermarkets D) non-profit organizations E) farms 3) Deborah wants to set up a business, but also wants to be aware of the roles business should take. Which of the following would Deborah not consider to be a role of business firms in the Canadian economy? 3) _______ A) support charitable organizations B) provide employment for citizens C) regulate the marketplace with trade barriers D) provide profit incentive for business owners E) provide community leadership 4) Profit is: 4) _______ A) the amount of sales B) the taxes a company pays C) what remains after business expenses are subtracted from business revenues D) the value of shares in a company E) the level of expenses 5) This week, Mary's Variety had sales of $4 000, employees were paid$1 000, cost of goods was $1 500, and rent was $500. Profit for the week was: 5) _______ A) $3 000 B) $4 000 C) $2 000 D) $1 000 E) $1 500 6) Most of the goods and services consumed in Canada are produced by: 6) _______ A) business firms B) the Canadian government C) the U.S. economy D) countries of the Pacific Rim E) overseas firms 7) An economic system is: 7) _______ A) the way in which a nation allocates its resources among its citizens B) an agreement between countries that deal with free trade C) a large government department that oversees how the economy is running D) a long standing agreement between citizens and governments on how an economy is run E) a government decree that requires certain goods and services to be provided 8) Jose is from Guatemala. He is unsure about the nature of business in Canada. You point out that a typical business in Canada operates the same as a typical business in: 8) _______ A) Japan B) People's Republic of China C) England D) Peru E) France 9) All of the following are factors of production except: 9) _______ A) capital B) labour C) entrepreneurs D) natural resources E) technology 10) Natural resources, as a factor of production for mining, is a practical consideration when a mining company considers: 10) ______ A) the number of customers who want to buy ore B) the ease with which ore could be mined C) the amount of capital required to build the mine D) the profit that could be made from mining the ore E) the number of miners available to mine the ore 11) Natural resources include: 11) ______ A) the funds needed to start and operate a business B) a large number of people with entrepreneurial tendencies C) land, water, and mineral deposits D) land, water, and gasoline E) the mental and physical capabilities of people 12) Labour includes: 12) ______ A) only workers who do physical work B) only managers C) only non-unionized employees D) only unionized employees E) everyone in the business 13) A factor that contributes directly to improving labour as a factor of production is: 13) ______ A) increased purchasing power by employees B) creation of more manual-labouring jobs C) free tuition at post-secondary educational institutions D) programs that decrease unemployment E) better education for more of the population 14) Susan wants to set up a small business. She should know that a major source of capital for most businesses, especially small businesses, is: 14) ______ A) personal investment B) investors C) loans from banks D) business revenue E) short-term loans 15) Marie owns a small restaurant and is thinking of expanding it to another location. She is best described as a(n): 15) ______ A) administrator B) employee C) venture capitalist D) capitalist E) entrepreneur 16) Entrepreneurs are important because they: 16) ______ A) are good managers B) are good at making decisions C) make lots of money D) are rich E) take risks to start new businesses 17) Bruce is wondering if he has the characteristics to be a good entrepreneur. You indicate that all of the following are characteristics of entrepreneurs except: 17) ______ A) a desire for a low-risk job B) a profit seeker C) someone who seeks opportunity D) an initiator E) a calculated risk taker 18) An individual who organizes the resources to produce goods and services to earn a profit, but also runs the risk of failure refers to: 18) ______ A) capitalism B) socialism C) entrepreneurs D) communism E) natural resources 19) A command economy is: 19) ______ A) one where there is a mix of government regulation and free enterprise B) one in which the market directs what is made and in what quantity C) one in which the government controls all or most factors of production D) one in which customers demand what new products are to be made E) the type of economy found in Russia 20) The economic system in which producers and consumers control production and allocation decisions through supply and demand is called: 20) ______ A) communism B) privatization C) centrally planned economy D) socialism E) market economy 21) You are involved in a debate about communism. You must know that a major drawback to communism as an economic system is that: 21) ______ A) communism is becoming less attractive B) government operated enterprises are inefficient because of political considerations C) individuals receive economic benefits according to their needs D) government control of the factors of production is only temporary E) individuals contribute according to their ability 22) Command economies are most likely to be found in: 22) ______ A) capitalistic

societies B) western Europe C) communist and socialist nations D) the newly emerging Asian countries E) Japan 23) Which of the following is not true in the communist economic system? 23) ______ A) centralized planning emphasis on capital equipment and military hardware has caused shortages of consumer goods B) communist nations often expand their overall production rapidly because of centralized planning C) the government owns and operates all the industries D) there is limited or no free enterprise E) most government-operated enterprises are inefficient 24) Stanislav lives in a country where all the sources of production are owned by the government. The economy system in his country is most likely: 24) ______ A) socialism B) fascism C) privatization D) communism E) mixed market 25) Which of the following is not true? 25) ______ A) The United States is not a purely capitalistic economy. B) No country in the world has a purely communistic economy. C) No country in the world has a purely capitalistic economy. D) No country in the world has a purely socialistic economy. E) The People's Republic of China and Cuba are purely communistic economies today. 26) What do the nations of Cuba, North Korea, Vietnam, and the People's Republic of China have in common? 26) ______ A) mixed economy B) socialism C) communism D) mercantilism E) market economy 27) An economic system that permits private ownership and control of small businesses but where the government is in control of large critical industries is known as: 27) ______ A) socialism B) mercantilism C) capitalism D) a mixed economy E) communism 28) Socialism is best described as: 28) ______ A) a kind of command economy in which the government owns and operates large critical industries B) an economic system with elements of both a planned economy and a market economy C) an economy that is free from any regulation or planning D) a market economy in which markets decide what, when, and how much to produce E) a kind of command economy in which the government owns and operates all industries 29) Socialist economies can stifle economic growth because: 29) ______ A) they encourage unionization of employees B) socialist economies actually have the best record, and they do not stifle economic growth C) they have too few regulations concerning product safety D) management positions in state-controlled industries are often filled on the basis of political considerations E) they are actually command economies 30) Market economies have all of the following characteristics, except that they: 30) ______ A) require government intervention in order to prosper B) encourage entrepreneurship by offering profits as an incentive C) rely on markets, not governments, to decide what, when, and for whom to produce D) allow customers free choice E) allow businesses to charge whatever they want for their products and services 31) Market economies are the best for small businesses because they: 31) ______ A) protect small businesses from the power of large corporations B) allow small businesses to fail C) provide small businesses with lots of government assistance and protection D) provide a central plan in which small businesses can easily prosper E) allow the business to do whatever it wants 32) B2B has become popular in strategic business thinking. Which of the following statements is NOT true about B2B? 32) ______ A) B2B transactions exceed $200 billion. B) B2C transactions far exceed B2B transactions in dollar value. C) B2B activity is good news for consumers because it helps to make businesses more efficient, which will allow them to reduce their costs. That, in turn, will allow them to reduce prices. D) B2B stands for business-to-

business electronic commerce. E) B2B involves businesses joining together to create e-commerce companies. 33) Canada is home to a(n) ________ economy. 33) ______ A) command B) fair C) mixed D) market E) oligopolistic 34) The role of government in our economic system includes all of the following except: 34) ______ A) innovator B) taxation agent C) competitor D) regulator E) customer 35) Sandy is responsible for monitoring compliance to regulations in her company. She needs to know that the important areas of regulation are: 35) ______ A) protecting competition, consumer protection and environmental regulations B) protecting competition, consumer protection, social goals and protecting the environment C) protecting social goals, ecological regulations and shareholder rights D) protecting competition and environmental regulations E) protecting shareholder rights and business law 36) John is interested in preserving social goals in Canada. However, he is not certain which goals are subject to regulation. You point out that the social goals that governments regulate are the following except: 36) ______ A) decent pensions B) employment insurance C) public health-care system with wide access D) motor vehicles E) a safe workplace 37) Madeline is responsible for answering questions about what her company can do under the Competition Act. Which one of the following is allowed under the Act? 37) ______ A) the return of surpluses by credit unions to its members B) forming a merger or a monopoly that lessens competition C) giving selective allowances and rebates to cover advertising expenses to specific retailers D) pricing products unreasonably low to eliminate competition E) refusal to sell to a retailer who, in turn, sells the product significantly below the suggested retail price 38) Why are income taxes called progressive taxes? 38) ______ A) because poorer people spend proportionally more on necessities B) the more one makes, a greater proportion of additional amounts is paid in income taxes C) the more one progresses in a company, the more one pays in income taxes D) the more one makes, the higher the income tax rate that is applied to one's entire income E) because it increases total consumption 39) Why are sales taxes called regressive taxes? 39) ______ A) because the more one makes, the lower the rate of sales tax that is applied to one's

purchases B) because they discourage the purchase of some products C) because it applies to sales taxes D) because poorer people pay a higher percentage of income than richer people E) because food and drugs are often exempt 40) Incentive programs are designed to: 40) ______ A) encourage businesses to make unprofitable products B) create "corporate welfare bums" C) encourage businesses to locate in depressed parts of the country D) encourage families to move to depressed parts of the country E) encourage families to have more babies 41) The textbook describes three main ways in which business can influence government policy. They are: 41) ______ A) advertising, trade associations, political contributions B) political contributions, letters to the editors of newspapers, advertising C) lobbyists, political contributions, advertising D) advertising, lobbyists, trade associations E) trade associations, lobbyists, letters to the editors of newspapers 42) A semiconductor firm is opening a new manufacturing facility in Canada and is looking for ways to better influence government policy in their industry. It could: 42) ______ A) obtain a government contract for supplies and equipment B) keep manufacturing plants in Canada C) obtain export business for the new facility D) hire a lobbyist or join a trade association E) assure worker safety in business facilities 43) As part of the Lobbyist Registration Act, lobbyists are required to: 43) ______ A) register with the Department of Consumer and Commercial Relations B) register with the Department of Lobbyists C) register with the Department of Finance D) register with the Registrar of Lobbyists E) attend 50 percent of all sessions in the House of Commons 44) The microelectronics manufacturers want to set up a trade association. They need to know that trade associations do all but which one of the following? 44) ______ A) arrange trade shows B) act as an industry lobby to influence legislation C) allocate markets for their members D) publish newsletters featuring articles on new products E) conduct training programs relevant to the industry 45) The economic term "demand" refers to: 45) ______ A) the willingness and ability of buyers to purchase a product or service B) the willingness of sellers to sell goods C) the stock exchange D) the willingness and ability of producers to purchase a product or service E) the willingness of government to sell goods and services 46) The law of demand states: 46) ______ A) that demand and supply meet at an equilibrium point B) buyers will purchase more of a product as the price falls C) producers will offer more of a product as the price rises D) producers will offer more of a product as the price falls E) buyers will purchase more of a product as the price rises 47) The law of supply states: 47) ______ A) that demand and supply meet at an equilibrium point B) producers will offer more of a product as the price falls C) producers will offer more of a product as the price rises D) buyers will purchase more of a product as the price rises E) buyers will purchase more of a product as the price falls 48) Ian, the owner of 5-for-1 Pizza, has noticed that when he increases the price of his pizzas by $2.00, the number of pizzas that he sells drops by 30 percent. Ian has discovered: 48) ______ A) the supply curve B) the law of demand C) the law of supply D) the law of supply and demand E) the demand curve 49) Kristine discovered that when she dropped the price of her paintings, more people were asking her to create paintings for them. Kristine is experiencing: 49) ______ A) market price variations B) mercantilism C) economic justice D) the law of demand E) the law of supply 50) A demand and supply schedule: 50) ______ A) is a formula by which one determines market equilibrium B) is the contractual agreement made between the buyer and seller C) describes the supply for a product D) allows one to assess the relationship between different levels of demand and supply at different prices E) describes the demand for a product 51) Which term is used to identify the willingness and ability of buyers to purchase a product? 51) ______ A) wealth B) prosperity C) obligation D) demand E) profits 52) A major producer of automobile batteries notes that the price of batteries has risen over each of the past three years. The firm decides to expand its battery production. This illustrates: 52) ______ A) the law of supply and demand B) the law of demand C) the law of market price D) the law of supply E) the law of equilibrium 53) In the production of wheat, the law of demand: 53) ______ A) reflects the farmer's desire to offer more wheat as demand increases B) occurs when farmers produce a bumper crop of wheat C) states that buyers will purchase more wheat as the price decreases D) reflects the farmer's desire to increase wheat production E) refers to the exchange process between the farmer and the buyer of wheat 54) A major producer of televisions is experiencing difficulty in selling its products. A corporate decision is made to lower the price, anticipating that sales will increase as a result of the lower price. This illustrates: 54) ______ A) the law of supply and demand B) the law of supply C) the law of equilibrium D) the law of demand E) the law of market price 55) The point at which the quantity of a product or service demanded is the same as the quantity supplied is called: 55) ______ A) the surplus point B) the equilibrium point C) the shortage point D) the supply point E) the demand point 56) On a graph showing the supply curve and the demand curve, the point at which the two curves intersect is called: 56) ______ A) the junction B) the equilibrium price C) the crossover D) the law of demand E) the break-even point 57) At the point where the supply curve crosses the demand curve on a graph, it could be said that: 57) ______ A) all products offered for sale will be sold B) a surplus will result C) no sales will be made D) a shortage will result E) no profits will be made 58) The points on a curve showing the relationship between the price of a good or service and the quantity of that good or service willing to be produced is known as the: 58) ______ A) demand curve B) variable price curve C) supply curve D) equilibrium curve E) balance curve 59) The points on a curve showing the relationship

between the price of a good or service and the quantity of that good or service which customers will purchase is known as the: 59) ______ A) equilibrium curve B) variable price curve C) demand curve D) balance curve E) supply curve 60) Equilibrium in the market is attained when: 60) ______ A) the laws of supply and demand interact to set the price and quantity of a product at which buyers and sellers agree B) there are no dramatic changes in the market over time C) consumers are willing to pay the price being charged D) suppliers are willing to produce the quantity demanded E) no single firm has more than 50 percent of the market 61) If the equilibrium point of 5-for-1 Pizza is 2 000 pizzas per week and $10.00 per pizza, and the owner decides to make 2 200 pizzas and sell them at the same price, what is the likely outcome? 61) ______ A) the business will have less expenses B) the business will have less expenses and also have greater profit C) the business will make more profit D) the business will have a surplus E) the business will have shortage 62) 5-for-1 Pizza is operating at the point where the supply curve intersects the demand curve. If the owner decides to increase the price and not change the production level, what will result? 62) ______ A) a shift in the supply curve B) a surplus C) more profit D) a shortage E) a shift in the demand curve 63) The market research department estimated that 5 000 CDs would be purchased at a price of $8.00 each. As it turned out, the demand was 6 000. The company is in a(n) ________ condition. 63) ______ A) shortage B) depression C) surplus D) inflation E) growth 64) If the market for chocolate was at equilibrium point and suddenly half of the chocolate in the world disappeared, what would be the immediate effect? 64) ______ A) the price would decrease due to a surplus B) the price would decrease due to market equilibrium C) the price would increase due to a surplus D) there would be no change in either price or demand E) the price would increase due to a shortage 65) What basic argument did Adam Smith make in his book, The Wealth of Nations? 65) ______ A) government should not interfere in the economy, but should let business function without regulation or restriction B) socialism is the best economic system C) the government should own the means of production D) someone will be more successful in business if he or she is a leader and true entrepreneur E) national wealth was created fastest by the mercantile system 66) Adam Smith, author of The Wealth of Nations, argued that a society's interests would be best served by: 66) ______ A) the political parties B) socialism C) private enterprise D) monopolies E) communism 67) Private enterprise requires four elements: 67) ______ A) the right to product safety, consumer choice, freedom of information, and no government intervention in business B) private property rights, freedom of choice, profits and competition C) supply, demand, equilibrium and monopoly D) land, labour, capital, and entrepreneurship E) communism, capitalism, socialism and privatization 68) The "Wealth of Nations" theory of laissez-faire was proposed by: 68) ______ A) the Disney Institute B) Adam Smith C) Henry Ford D) Andrew Carnegie E) Karl Marx 69) Private enterprise requires all of the following, except: 69) ______ A) competition B) private property rights C) a demand and supply schedule D) freedom of choice E) profits 70) In his book, The Wealth of Nations, Adam Smith maintained that the creation of wealth should be the concern of: 70) ______ A) students B) individuals and firms C) all citizens D) the government E) heavenly powers 71) A few years ago, General Motors decided to develop a new car, the Saturn. Sally checked it out at her local dealership and decided to buy one. We can conclude that: 71) ______ A) Sally exercised her freedom of choice B) this example doesn't relate to freedom of choice C) both General Motors and Sally exercised their freedom of choice D) neither General Motors nor Sally exercised their freedom of choice E) General Motors exercised its freedom of choice 72) The four degrees of competition include all of the following except: 72) ______ A) pure competition B) oligopolies C) monopolistic competition D) monopolies E) pure monopolistic competition 73) An outcome of competition is that business firms: 73) ______ A) can drop out of the pricing war unnoticed B) reduce their need for expansion capital C) must operate efficiently D) can easily develop a monopoly E) have unrestricted access to natural resources 74) Which of the following motivates an entrepreneur to operate his or her business efficiently? 74) ______ A) freedom of choice B) private property rights C) competition D) right to vote E) privatization 75) Brown Company wants to create an advantage over its competitors. To gain this advantage it must develop a product that must be either ________ or ________ competition. 75) ______ A) priced the same, have poorer quality than B) lower priced, equal the quality of C) priced the same, equal the quality of D) lower priced, have better quality than E) higher priced, equal the quality of 76) Individual firms must be small and the number of such firms must be large. This describes which degree of competition? 76) ______ A) monopolistic competition B) monopoly C) perfect competition D) oligopoly E) selective competition 77) Bob owns the St. Paul Street one-stop convenience store. He owns one of the 300 convenience stores in his region. Which degree of competition is Bob involved in? 77) ______ A) monopoly B) oligopoly C) monopolistic competition D) perfect competition E) oligopolistic competition 78) In a market with perfect competition: 78) ______ A) buyers and sellers do not know the price structure of the market B) products have very few similarities C) price is set by supply and demand D) firms are relatively large E) there are very few sellers 79) Which one of the following is the best example of perfect competition? 79) ______ A) utility industry B) automobile industry C) agricultural industry D) clothing industry E) soft drink industry 80) Which one of the following is not a characteristic of an oligopoly? 80) ______ A) prices differ greatly B) many buyers C) swift response

to price changes of a competitor D) few sellers E) great product differentiation 81) McDonnell Douglas, a manufacturer of large commercial aircraft, raises its prices of aircraft by 10 percent. Boeing, another manufacturer of large commercial aircraft, raises its prices by 9 percent. Airbus, a third manufacturer of large commercial aircraft, follows with an increase of 9.5 percent. Each of these companies is practising a type of pricing strategy characteristic of: 81) ______ A) a monopoly B) monopolistic competition C) perfect competition D) controlled competition E) an oligopoly 82) In a given national market, only five firms make and distribute little red wagons. This illustrates which degree of competition? 82) ______ A) selective competition B) monopoly C) monopolistic competition D) perfect competition E) oligopoly 83) Competition like that between Tide and Cheer, Coke and Pepsi, and Sears and Ralph Lauren is: 83) ______ A) monopolistic competition B) oligopoly C) perfect competition D) oligopolistic competition E) monopoly 84) Which of the following businesses has a natural monopoly? 84) ______ A) Kleenex B) Your provincial electric company C) De Beers Diamonds D) Chapters Bookstore E) Via Rail 85) Bailey Wear manufactures children's clothing. The company is able to set its prices higher than its competitors because of the fine material it uses and the attention it pays to the quality of the sewing. Bailey Wear is operating in a competitive environment of: 85) ______ A) oligopolistic competition B) monopolistic competition C) perfect competition D) oligopoly E) monopoly 86) Competition in which there are many buyers, a lot of product differentiation, and relative ease of entry or exit of the market is known as: 86) ______ A) perfect competition B) monopolistic competition C) monopoly D) oligopoly E) oligopolistic competition 87) The Industrial Revolution refers to: 87) ______ A) development of the Entrepreneurial era B) development of the Internet era C) a major change in the production of goods that began in England in the mid 1700s D) fur and fishing industry in Canada in the 1500s E) none of the above 88) Which of the following is NOT a characteristic of perfect competition? 88) ______ A) Very difficult for a firm to enter or leave the market. B) Firms are small. C) Easy to enter and leave the industry. D) Many firms in the industry. E) Great similarity among products offered by different firms. 89) Which of the following is NOT a characteristic of perfect competition? 89) ______ A) Great similarity among products offered by different firms. B) Easy entry into the industry. C) Many firms in the industry. D) Firms are small. E) Products from different firms are easily differentiated from one another. 90) Which of the following is NOT one of the principles underlying perfect competition? 90) ______ A) Buyers and sellers know what the current market price is. B) The government will set prices at the optimal level. C) It is easy for firms to enter and leave the market. D) Prices are set by the laws of supply and demand. E) Products are perceived as being identical. 91) Which of the following is NOT a characteristic of monopolistic competition? 91) ______ A) Products are similar, but not identical to those of competitors, B) Easy entry to the industry. C) Only a few sellers. D) Some control over price by sellers. E) Many sellers, but less than perfect competition. 92) Of the following, which is a way in which monopolistic competition differs from perfect competition? 92) ______ A) In a market characterized by monopolistic competition, individual firms have some control over price. B) There are more sellers in a market characterized by monopolistic competition. C) It is easier for sellers to enter a market/industry characterized by monopolistic competition. D) In a perfectly competitive market, products are more dissimilar. E) none of the above 93) Which of the following is TRUE concerning monopolistic competition? 93) ______ A) Competitors may be large or small. B) Competitors can enter and leave the market easily. C) Products are differentiated. D) Many competitors in the industry. E) all of the above 94) Which of the following is TRUE concerning monopolistic competition? 94) ______ A) Prices vary from one competitor to the next, but products are very similar. B) Prices and products are very similar. C) Both products and prices differ from one competitor to the next. D) Prices are similar but products can be differentiated. E) none of the above 95) ________ exists when an industry has a handful of sellers, most of which are large. 95) ______ A) Perfect competition B) A monopoly C) Monopolistic competition D) An oligopoly E) none of the above 96) Which of the following is the best definition of an oligopoly? 96) ______ A) An industry with many buyers, but only one seller. B) An industry with only a handful of sellers, most of which are large. C) An industry with many buyers and many sellers; sellers have some control over price. D) An industry with many buyers and many sellers; sellers have no control over price. E) An industry with only one buyer, but many sellers. 97) Competition in which there are a handful of very large sellers, market entry is difficult, and a company can have a major impact on the product price is known as ________. 97) ______ A) monopolistic competition B) free market enterprise C) oligopoly D) monopoly E) perfect competition 98) Which type of competition is best represented by the airline industry, the automobile industry, or the steel industry? 98) ______ A) free market enterprise B) perfect competition C) oligopoly D) monopoly E) monopolistic competition 99) General Motors lowers its price of cars by 10%. Ford matches GM's price decrease. Each of these companies is practicing a type of pricing strategy characteristic of ________. 99) ______ A) a monopoly B) monopolistic competition C) controlled competition D) perfect competition E) an oligopoly 100) In the market for breakfast cereals, a few large producers, such as General Mills, Post, Quaker, and Kellogg, dominate the market. This best describes which of the following? 100) _____ A) perfect competition B) limited cartel C) oligopoly D) monopolistic competition E) monopoly 101) Which of the following is NOT true of an oligopoly? 101) _____ A) Prices differ greatly among sellers. B) Entry into the industry is difficult. C)

Competing firms have very similar prices for products. D) There are a few sellers. E) The actions of one firm will significantly affect the sales of other firms. 102) Which of the following industries would not be considered an oligopoly? 102) _____ A) airlines B) steel C) automobiles D) appliance E) agriculture 103) In an oligopoly, when one firm reduces its prices, how do the other firms of the industry react? 103) _____ A) Others reduce theirs also?usually quite quickly. B) Others may reduce there prices too, but very gradually over time. C) There is no reaction by any of the other firms. D) Other firms are not even aware that a change in price has taken place. E) none of the above 104) An industry in which one firm can most efficiently supply all the demand is ________. 104) _____ A) a natural oligopoly B) an illegal monopoly C) a controlled monopoly D) a legal oligopoly E) a natural monopoly 105) Of the following periods, which came first? 105) _____ A) Marketing Era B) Industrial Revolution C) Production Era D) Entrepreneurial Era E) Global Era 106) Which of the following most accurately reflects the history of business in Canada, from earliest to most recent? 106) _____ A) Industrial Revolution, Production Era, Entrepreneurial Era, Marketing Era, Internet Era, Global Era B) Industrial Revolution, Entrepreneurial Era, Production Era, Marketing Era, Global Era, Internet Era C) Entrepreneurial Era, Industrial Revolution, Global Era, Marketing Era, Internet Era, Production Era D) Production Era, Industrial Revolution, Entrepreneurial Era, Marketing Era, Global Era, Internet Era E) Marketing Era, Entrepreneurial Era, Industrial Revolution, Marketing Era, Global Era, Internet Era 107) Which of the following is a NOT a characteristic of mass production? 107) _____ A) Reduce the cost of raw materials. B) Replace craftsmen with semiskilled workers. C) Reduce duplication of equipment. D) Each worker performs a specialized task. E) Allow producers to buy smaller quantities of raw materials. 108) The ________ philosophy says that the government should not interfere in the economy, but should instead let business function without regulation according to its own "natural" laws. 108) _____ A) market economy B) laissez-faire C) entrepreneurship D) invisible hand E) natural selection 109) During the Entrepreneurial Era, businesses were allowed to run without regulation under the philosophy of ________. 109) _____ A) socialism B) mass production C) specialization of labor D) antitrust E) laissez-faire 110) Scientific management practices focus on 110) _____ A) increasing employee satisfaction. B) increasing job quality by adding flexibility. C) developing several ways of doing the same task. D) reducing absenteeism. E) increasing efficiency. 111) Scientific management was given impetus when ________ introduced the moving assembly line and ushered in the production era. 111) _____ A) Eli Whitney B) Henry Ford C) Cyrus McCormick D) Frederick Taylor E) Andrew Carnegie 112) Who is MOST closely associated with the Production Era? 112) _____ A) Andrew Carnegie B) Andrew Mellon C) John D. Rockefeller D) Henry Ford E) J.P. Morgan 113) Which of the following eras was prompted by increased consumer demand after World War II? 113) _____ A) Global Era B) Entrepreneurial Era C) Marketing Era D) Production Era E) Industrial Revolution 114) Which of the following eras is tied to the prosperity of the 1950s and 1960s? 114) _____ A) Production Era B) Internet Era C) Entrepreneurial Era D) Marketing Era E) Industrial Revolution 115) During the ________ Era, businesses became less focused on production and sales and more focused on consumers. 115) _____ A) Global B) Consumer C) Marketing D) Sales E) Internet 116) One of the most critical elements in the Global Era is the 116) _____ A) reduction in the dependence upon outsourcing. B) importance of technology. C) All the items on this list are critical elements in the Global Era. D) producers' expansion to a wider range of activities. E) willingness of companies to make more items in-house. 117) Technological advances, improved communication, and more efficient transportation networks contributed to the emergence of the 117) _____ A) Global Era. B) Marketing Era. C) Production Era. D) Entrepreneurial Era. E) Industrial Revolution. 118) The early years of business in Canada were motivated by: 118) _____ A) profits from fishing B) a desire to settle in the Prairies C) a desire to find a way to China D) profits from logging E) profits from mining 119) Why was Canadian manufacturing slow to develop in the 16th and 17th centuries? 119) _____ A) most people were involved in farming B) too few manufacturing managers C) policy of mercantilism D) most people were involved in trading of furs E) too few buyers of manufactured goods 120) Which government(s) supported the mercantilism philosophy? 120) _____ A) English and Asian B) Canadian C) English and French D) no governments supported it E) Asian and North American 121) All of the following is true about the Industrial Revolution except: 121) _____ A) it led to the decline of cottage industries B) it led to wide use of semi-skilled employees C) it enabled mass production D) it discouraged specialization of labour E) it led to the development of the factory system 122) During which period did mass production reduce duplication of equipment and allow firms to purchase raw materials at better prices? 122) _____ A) Industrial Revolution B) the marketing era C) entrepreneurial era D) colonial period E) the production era 123) Which of the following best illustrates specialization of labour? 123) _____ A) workers who learn new, specialized skills are rewarded with higher pay B) raw materials were provided to England in return for finished goods C) semiskilled workers are trained to perform only one task D) highly skilled craftspeople who can do all the tasks required to make an item E) each labour union represents only one type of worker 124) Which of the following occurred when the factory system began? 124) _____ A) factory workers became owners through ESOPs B) all the materials and labour required to produce items in massive

quantities were brought to one place C) a laissez-faire management process developed D) the size and economic power of some firms meant that other businesses had difficulty competing against them E) it produced captains of industry who were interested in meeting the needs of the customer 125) Which item in the following list was NOT typical of the entrepreneurial era? 125) _____ A) increased number of monopolies B) price-fixing C) laissez-faire attitude by government D) growing competition E) some individuals became immensely wealthy through their aggressive business dealings 126) How did Adam Smith's ideas outlined in The Wealth of Nations lead to a policy of laissez-faire? 126) _____ A) there was no

connection between Smith's book and a laissez-faire policy B) Smith's book was an inspirational book that motivated many entrepreneurs C) The Wealth of Nations argued that the government should not interfere in the economy, but should let businesses function without regulation or restriction D) the book outlined steps that could be taken to improve international trade E) Smith argued that governments should be actively involved in the economy 127) According to the textbook, the first manufacturing in Canada consisted of all of the following except: 127) _____ A) grist mills B) sawmills C) shipbuilding D) shoemakers' shops E) breweries 128) The entrepreneurial era contained all but one of the following: 128) _____ A) some business leaders decided to fix prices and manipulate the market system to their advantage B) the use of the assembly line was introduced C) some businesses had difficulty competing against the size and economic power of some firms D) some business executives made over $25 000 per year in the late 1800s E) the Canadian government adopted a laissez-faire attitude toward business 129) The entrepreneurial era in Canada occurred: 129) _____ A) in the last half of the 19th century B) in the first half of the 18th century C) in the first half of the 20th century D) in the last half of the 18th century E) in the first half of the 19th century 130) The Scientific Management Movement can be best characterized by the phrase: 130) _____ A) "empowerment to employees" B) the "one best way" C) "progress through technology" D) "cooperation between management and union" E) "quality is job 1" 131) Which of the following best completes the following sentence? During the production era: 131) _____ A) great emphasis was placed upon satisfying the customer B) the improved production output resulting from assembly lines was obtained by increasing worker freedom C) the factory system brought together in one place all the materials and workers required to produce items in large quantities D) the presence of big firms aided individuals who wished to go into business for themselves E) Henry Ford introduced the first moving assembly line which brought automobile parts to the worker 132) The development of labour unions and collective bargaining agreements were major elements of the: 132) _____ A) colonial period B) production era C) global era D) entrepreneurial era E) industrial revolution 133) The marketing era involved: 133) _____ A) the production of the same type of goods B) the production of items within the existing factories C) an emphasis on efficiency so that the selling price may be lowered D) the identification of the customer's needs E) the hiring of the right salespeople 134) What are the three countervailing powers in today's society? 134) _____ A) government, business, public opinion B) government, business, labour C) consumers, government, public opinion D) consumers, business, public opinion E) consumers, government, business 135) Which era held the philosophy "use market research to determine what customers want and then make it for them"? 135) _____ A) finance B) marketing C) scientific D) sales E) production 136) Why did businesses move from a production orientation to a sales orientation? 136) _____ A) Businesses were able to keep their production costs low. B) Businesses were becoming very good at creating new products. C) Businesses discovered the power of advertising. D) Businesses were able to develop niche marketing schemes. E) Businesses experienced greater competition. 137) Why did businesses adopt the marketing approach to business? 137) _____ A) Mass markets required mass advertising, which is what marketing does. B) Production costs got to be about as low as they were going to get, thus profit would not improve. C) Competition between businesses became greater than ever. D) The competition for sales representatives increased as employees became very intense. E) There was pent-up demand after World War II. 138) Able Manufacturing is very good at making kitchen utensils. However, it wants to ensure that its products will always be profitable. What should it do? 138) _____ A) lower the costs of production so the products are always profitable B) hire the finest sales representatives to sell what it makes C) try charging a lot of money for its products in the hope that it will result in snob appeal D) determine customer needs and focus its product lines to fill those needs E) change its product lines to fit what its management thinks customers want 139) The 1980s are called the "decade of greed" because: 139) _____ A) a few people enriched themselves through corporate takeovers B) banks had lots of money to spend C) many people did not care for the poor D) a lot of people had extra money that they could spend on themselves E) most people received high wage increases 140) A global economy means: 140) _____ A) that North America is the only place affected by a global economy B) that Canadian companies can never prosper in a global environment C) domestic companies now have to compete with other companies located overseas D) individuals cannot buy things from all over the world E) that technological changes will occur more rapidly 141) The growth of the Internet affects business in many ways, including: 141) _____ A) the Internet holds considerable potential as an effective and efficient

networking mechanism among businesses B) the Internet will increase the number of dot-coms that go bankrupt C) the Internet will be dominated by the larger companies D) the growth rate of the Internet will grow to over 900 users per 1000 people by 2005 E) the Internet will give a slight boost to trade in selected sectors of the economy 142) Which of the following are effects of Internet business? 142) _____ A) It holds considerable potential as an efficient networking mechanism among businesses. B) It will give a dramatic boost to trade in all sectors of the economy. C) It will serve to level the playing field between large and small companies. D) all of the above E) none of the above TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 143) Profits from business are used to support government and charities as well as business owners and stockholders. 143) _____ 144) A business is an organization that seeks to earn profits by providing goods and services. 144) _____ 145) The reward that the owners of a business receive for taking the risks of investing their money and time is called capital. 145) _____ 146) The term "business" typically includes large organizations such as General Motors, which seek a profit, but does not include individuals who are self-employed, e.g., a carpenter, or a beautician who operates a shop in her home. 146) _____ 147) An economic system allocates a nation's resources among its citizens. 147) _____ 148) Labour is a factor of production. 148) _____ 149) Capital is needed only to start up a business. 149) _____ 150) Natural resources include land, mineral deposits as well as crops that are grown. 150) _____ 151) The natural resources component of the factors of production includes the physical and mental capabilities of people in the work force. 151) _____ 152) In a command economy, a centralized government controls all, or most, of the factors of production and makes most decisions involving production of goods and services. 152) _____ 153) Communism is an example of a market economy where a central government controls most factors of production. 153) _____ 154) Communism and socialism are both types of command economies. 154) _____ 155) Although workers in socialist countries are usually allowed to choose their occupations, a large proportion generally work for the government. 155) _____ 156) Capitalism relies on the factors of demand and supply in the marketplace to determine what, when, and for whom to produce. 156) _____ 157) A mixed market economy has elements of both a command economy and a market economy. 157) _____ 158) The government plays several different roles in the Canadian economy, including the roles of customer, competitor and regulator. 158) _____ 159) Crown corporations only exist at the federal level and account for a significant and wide variety of economic activity in Canada. 159) _____ 160) The reasons why the government regulates many aspects of business activity include: protecting competition, protecting consumers, achieving social goals, and protecting the environment. 160) _____ 161) Revenue taxes are levied to control certain activities that legislative bodies believe should be controlled. 161) _____ 162) Government incentive programs always have the desired effect of stimulating the economy. 162) _____ 163) If the Canadian Auto Workers (CAW) want to bring their interests to government officials they would hire a lobbyist. 163) _____ 164) A demand and supply schedule is derived from market research and other systematic studies of the market. 164) _____ 165) The law of demand states that buyers will purchase more of a product as its price drops. 165) _____ 166) In economic terms, the exchange process between buyers and sellers is called "supply." 166) _____ 167) In economic terms, "market" refers to a specific place like a supermarket. 167) _____ 168) The economic term "market" refers to a place of trade. 168) _____ 169) The law of supply states that producers will offer more of a product for sale as its price rises. 169) _____ 170) If the market for diamonds is at equilibrium and De Beers increased its prices, people would still demand the same quantity of diamonds. 170) _____ 171) A demand curve shows the amount of goods and services a producer will create at different prices. 171) _____ 172) The point on a demand and supply schedule where supply and demand are equal is known as the break-even point. 172) _____ 173) The equilibrium price occurs where the supply of a particular product is equal to the number of customers who wish to purchase that product. 173) _____ 174) A surplus in the market is good news for the firm selling a product or service because there are additional customers still trying to purchase the product. 174) _____ 175) If a hot dog vendor cooked 14 too many sausages, those 14 sausages would not sell. The excess supply of sausages can also be referred to as surplus. 175) _____ 176) Adam Smith argued that a society's interests are best served by a command economy. 176) _____ 177) Private property rights are an essential element of a communist economic system. 177) _____ 178) The private enterprise system guarantees a profit for each business firm. 178) _____ 179) Freedom of choice refers to just buyers of goods and services. 179) _____ 180) What a company chooses to produce will, by definition, be affected by the profits it hopes to make. 180) _____ 181) The private enterprise system guarantees that competition among business firms will be fair. 181) _____ 182) In monopolistic competition, sellers try to make their products at least appear to be slightly different from those of other competitors by tactics such as brand names, design or styling, and advertising. 182) _____ 183) Coke and Pepsi represent oligopolistic competition. 183) _____ 184) In an oligopoly only a handful of sellers compete mainly through product differentiation. 184) _____ 185) An oligopoly features many sellers and products, which may be similar or different. 185) _____ 186) A natural monopoly exists when a single company can fill the needs of all customers in a specific area. 186) _____ SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 187) What

are profits and why are they important to the economic system in Canada? 187) ____________ 188) Explain the terms, "command economy" and "market economy." Give an illustration of each. 188) ____________ 189) What are the factors of production? Explain each briefly. 189) ____________ ESSAY. Write your answer in the space provided or on a separate sheet of paper. 190) What is an entrepreneur? SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 191) There are three major types of economic systems in existence. Identify and briefly describe them. 191) ____________ 192) What is the difference between capitalism and socialism? 192) ____________ 193) Describe the law of demand. 193) ____________ 194) What does the supply curve reflect? 194) ____________ 195) List the four required elements for a private enterprise system. 195) ____________ 196) List the four degrees of competition that can exist in a private enterprise system. 196) ____________ 197) Briefly describe the concept of laissez-faire.

197) ____________ ESSAY. Write your answer in the space provided or on a separate sheet of paper. 198) Discuss the government's role as: (a) a competitor, (b) a regulator, (c) a taxation agent, and (d)

a provider of incentive programs. 199) Discuss the two reasons that the government uses to justify regulation of business activities. Do you believe regulation of business is justified as an owner or manager?

As a consumer? 200) Explain how demand and supply work in a capitalistic economy. 201) Inaccuracies in forecasting an exact supply-demand schedule create surpluses and shortages. Describe what surpluses and

shortages are using the concepts of supply and demand and indicate the probable impact of each upon price. 202) Describe the potential impact if a company underestimates demand. 203) Explain the four

essential elements of private enterprise. 204) Identify and explain the four basic degrees of competition. Provide an example of each. 205) Discuss the reasons why the Canadian government permits certain

"natural" monopolies while forbidding attempts by business firms to create a monopoly in other parts of the economy. 206) Discuss the development of business in Canada from the early colonial years to the present

day. 207) Describe perfect competition in terms of the number of competitors, ease of entry into the market, similarity of goods/services offered by competing firms, and level of control over price by individual firms. Give an example of a purely competitive market or industry. 208) Describe monopolistic competition in terms of the number of competitors, ease of entry into the market, similarity of goods/services offered by competing firms, and level of control over price by individual firms. Give an example of a market or industry characterized by monopolistic competition. 209) Describe oligopoly in terms of the number of competitors,

ease of entry into the market, similarity of goods/services offered by competing firms, and level of control over price by individual firms. Give an example of a market or industry that is an oligopoly. 210) Describe

monopoly in terms of the number of competitors, ease of entry into the market, and level of control over price by individual firms. Give an example of a market or industry that is a monopoly. 211) What was the

Industrial Revolution?

1) A 2) D 3) C 4) C 5) D 6) A 7) A 8) C 9) E 10) B 11) C 12) E 13) E 14) A 15) E 16) E 17) A 18) C 19) C 20) E 21) B 22) C 23) B 24) D 25) E 26) C 27) A 28) A 29) D 30) A 31) E 32) B 33) C 34) A 35) B 36) D 37) A 38) B

39) D 40) C 41) D 42) D 43) D 44) C 45) A 46) B 47) C 48) B 49) D 50) D 51) D 52) D 53) C 54) D 55) B 56) B 57) A 58) C 59) C 60) A 61) D 62) B 63) A 64) E 65) A 66) C 67) B 68) B 69) C 70) B 71) C 72) E 73) C 74) C 75) D 76) C 77) D 78) C 79) C 80) A 81) E 82) E 83) A 84) B 85) B 86) B 87) C 88) A 89) E 90) B 91) C 92) A 93) E 94) C 95) D 96) B 97) C 98) C 99) E 100) C 101) A 102) E 103) A 104) E 105) B 106) B 107) E 108) B

109) E 110) E 111) B 112) D 113) C 114) D 115) C 116) B 117) A 118) A 119) C 120) C 121) D 122) A 123) C 124) B 125) D 126) C 127) C 128) B 129) A 130) B 131) E 132) B 133) D 134) B 135) B 136) E 137) C 138) D

139) A 140) C 141) A 142) D 143) TRUE 144) TRUE 145) FALSE 146) FALSE 147) TRUE 148) TRUE 149) FALSE 150) TRUE 151) FALSE 152) TRUE 153) FALSE 154) TRUE 155) TRUE 156) TRUE 157) TRUE 158) TRUE 159)

FALSE 160) TRUE 161) FALSE 162) FALSE 163) TRUE 164) TRUE 165) TRUE 166) FALSE 167) FALSE 168) FALSE 169) TRUE 170) FALSE 171) FALSE 172) FALSE 173) TRUE 174) FALSE 175) TRUE 176) FALSE 177) FALSE 178) FALSE 179) FALSE 180) TRUE 181) FALSE 182) TRUE 183) FALSE 184) TRUE 185) FALSE 186)

TRUE 187) ∙ revenues minus expenses∙ they are rewards for taking risks∙ used to support government and charities, pay wages

∙ needed to continue producing goods and services 188) ∙ command: government dominated, government controls the factors of production, people often work for the government, share the wealth equally, one class

society, example - China∙ market: the people have a say in what the government does, individuals control factors of production, independent wealth, rich/middle class/poor, example - Canada∙ no economy is purely command or market, even China and Canada 189) ∙ natural resources: items used in

the production of goods and services in their natural state, including land, water, minerals, and trees∙ labour: the mental and physical training and talents of people; sometimes called human resources∙ capital: the funds needed to operate an enterprise∙ entrepreneur: an individual who organizes and manages natural resources, labour, and capital to produce goods and services to earn a profit, but who also runs the risk of failure∙ newer perspectives tend to broaden the idea of "natural resources" to include all physical resources

∙ while the production of tangible goods once dominated most economic systems, today information resources play a major role-information resources refers to information such as market forecasts, economic

data, and specialized knowledge of employees that is useful to a business and that helps it achieve its goals 190) ∙ an individual who organizes and manages labour, capital and natural resources to produce goods and

services to earn a profit, but who also runs the risk of failure ∙ business person ∙ manager ∙ initiator ∙ leader

∙ risk taker 191) ∙ command economies: a type in which the government controls all or most factors of production and makes all or most production decisions

∙ market economies: a type in which individuals control all or most factors of production and make all or most production decisions

∙ mixed economies: a type with elements of both a command economy and a market economy 192) ∙ capitalism: an economic system in which markets decide what, when and for whom to produce

∙ capitalist market economy: citizens run businesses, more efficient, choose your own job∙ socialism: a kind of command economy in which the government owns and operates the main industries, while individuals own and operate less crucial industries

∙ less efficient, large proportion of people end up working for government 193) Buyers will purchase (demand) more of a product as its price drops and less of a product as its price increases. 194) The supply curve shows how much of a product will be supplied at different prices. 195) Private property, freedom of

choice, profits, and competition. 196) Perfect competition, monopolistic competition, oligopoly, and monopoly. 197) The concept of laissez-faire refers to the idea that the government should not interfere in

the economy. 198) ∙ competitor: the government competes with business through Crown corporations (energy, Royal Canadian Mint, St. Lawrence Seaway Authority).

∙ regulator: federal and provincial governments in Canada still regulate many aspects of business activity. Government regulates business through many administrative boards, tribunals or commissions (CRTC, CTC, Canadian Wheat Board).∙ taxation agent: taxes are imposed to fund government services and programs, and to regulate and control certain activities. There are revenue taxes and restrictive taxes.

∙ provider of incentive programs: through programs like the Industrial Regional Development Program, federal assistance is delivered to industries, particularly those in disadvantaged regions. Other programs

include tax and duty rebates. 199) ∙ to encourage and protect competition by seeking to eliminate restrictive trade practices

∙ to provide consumer protection∙ owner/manager: government regulations create a fair and honest business world in the best interests of everyone

∙ consumer: government creates fair business for corporations and consumers 200) ∙ demand is the willingness and ability of buyers to purchase a product or service

∙ supply is the willingness and ability of producers to offer a good or service for sale∙ supply and demand equilibrate such that buyers pay a fair price and sellers obtain a fair price for their goods and services 201) ∙ surpluses occur when the quantity supplied exceeds the quantity demanded,

prices will decrease∙ shortages occur when the quantity demanded exceeds the quantity supplied, prices will increase 202) ∙ too

few products produced∙ potential profits lost∙ angry customers cannot buy what they want

∙ knowledge of the shortage attracts more competition 203) ∙ private property: right to buy, own, use, and sell an item

∙ freedom of choice: the right to choose what to buy or sell, including one's labour∙ profits: we earn what we work for, and thus work hard and efficiently

∙ competition: rivalry between firms in a specific market to best satisfy consumer demands and earn profits 204) ∙ perfect competition: a market or industry characterized by a very large number of small firms

producing an identical product so that none of the firms has any ability to influence price; completely run by the law of supply/demand, e.g., shoe store

∙ monopolistic competition: a market or industry characterized by a large number of firms supplying products that are similar but distinctive enough from one another to give firms some ability to influence price; severe competition, e.g., soda pop producers∙ oligopoly: a market or industry characterized by a small number of very large firms that have the power to influence the price of their product and/or resources; slightly competitive, look to differentiation, e.g., breakfast cereals

∙ monopoly: a market or industry with only one producer, who can set the price of its product and/or resources; watched very closely by government, e.g., basic cable service 205) ∙ natural monopolies are

industries in which one economy can most efficiently supply all the product or service that is needed∙ natural economies eliminate unnecessary costs and waste∙ competition, which is the root of why business works so well in capitalistic society∙ no competition, firm run less efficiently and quality is not as high and society does not benefit as much 206)

∙ business activity and profit from commercial fishing in the late 1400s motivated European involvement in Canada

∙ French and British adventurers began trading with the native peoples in the 1500s∙ by the late 1600s coureurs de bois travelled west in search of new sources of furs∙ European settlers arrived in Canada in the 16th and 17th centuries∙ Canadian manufacturing slowly developed under mercantilism∙ industrial revolution brought about mass production∙ entrepreneurial era saw the emergence of people willing to take risks in hope of profits∙ production era refined concepts of specialization and mass production∙ sales and marketing era focused on sales forces, advertising and supply∙ finance era focused on the buying and selling of business enterprises∙ global era noted for the emergence of a truly global economy

∙ internet era of business 207) For perfect competition to exist, all of the firms in an industry must be small and the number of the firms in the industry must be large. Under these conditions, no single firm is powerful

enough to influence the price of its product. The products of each firm are so similar that buyers will perceive them as identical to those of other firms. Because each firm is small, it is easy for firms to enter or leave the

market. U.S. agriculture is a good example of perfect competition. 208) In a market characterized by monopolistic competition, there are fewer sellers than in perfect competition. Sellers will attempt to

differentiate their product from those of their competitors. Product differentiation gives sellers some control over prices. While monopolistically competitive businesses can be large or small, they can enter and exit the

market easily. There are many examples of monopolistically competitive markets, particularly in the retail market (the market for jeans, the market for laundry detergents, the market for soft drinks, etc.). 209) When

an industry has only a few sellers, an oligopoly exists. While there are only a few sellers, they tend to be large. The entry of new competitors is difficult because of the large capital investment needed. As with

monopolistic competition, sellers will attempt to differentiate their product from those of their competitors and each seller will have some control over price. However, when one firm cuts prices, others will tend to do

the same. Therefore, the prices of comparable products are usually similar. The automobile, airline, and steel industries are all oligopolies. 210) A monopoly exists when an industry or market has only one producer. The

sole supplier enjoys complete control over the prices of its products. Its only constraint is a decrease in consumer demand due to increased prices. In the United States, the Sherman Antitrust Act and the Clayton

Act forbid many monopolies and regulate prices charged by natural monopolies. 211) The Industrial Revolution began in the middle of the eighteenth century with advances in technology and the development

of the factory system. Prior to the Industrial Revolution, cottage workers produced products one item at a time. The factory system brought together materials and workers to produce items in large quantities and

the new machines needed for mass production. In turn, mass production reduced duplication of equipment and allowed firms to buy materials at better prices by buying in larger lots. It also encouraged the

specialization of labor. Mass production replaced a system of highly skilled craftspeople who performed all the different tasks required to make a single item. Instead, a series of semiskilled workers each trained to

perform only one task and aided by specialized equipment, greatly increased output.