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1. Which of the following is one of the main principles of the private enterprise system:

a. Monopolies c. Price fixing

b. Competition d. Exclusive agreements

2. Burger King and McDonald’s are examples of

a. regulated monopolies. c. dissimilar firms.

b. unrelated businesses. d. direct competitors.

3. If a consumer chooses to go to the movies rather than to a pizza parlor, then the movie theater and the pizza parlor are

a. direct competitors. c. engaged in prospecting.

b. indirect competitors. d. engaged in price competition.

4. Most businesses put their greatest competitive efforts into competing

a. locally. c. with direct competitors.

b. nationally. d. with indirect competitors.

5. An electronics store charges less for a new television than other electronics stores. The store is engaging in ________ competition.

a. price c. unethical

b. nonprice d. sales

6. When Maura purchased a new car, she was able to get part of the purchase price back from the car’s manufacturer. The car’s manufacturer engaged in

a. price fixing. c. clearance sales.

b. nonprice competition. d. offering rebates.

7. Offering high quality, large assortments, and free shipping are examples of

a. rebates. c. price fixing.

b. nonprice competition. d. price competition.

8. A business that advertises a special sale as well as its delivery service is using a combination of ___________ competition.

a. price and nonprice c. perfect and monopolistic

b. direct and indirect d. local and national

9. Which of the following statements about perfect competition is correct:

a. There is a limited supply of goods and services.

b. Businesses have a good deal of control over the market.

c. Products vary from seller to seller.

d. It is used as a benchmark to compare real market structures against.

10. What type of market structure is most commonly found in a private enterprise economy?

a. Perfect competition c. Oligopoly

b. Regulated monopoly d. Monopolistic competition

11. The automobile industry, the pharmaceutical industry, and the oil industry are all examples of

a. market structures. c. oligopolies.

b. perfect competition. d. monopolistic competition.

12. Which of the following are qualities of monopolies:

a. High prices and low production c. High prices and much competition

b. Low production and much competition d. Low prices and little competition

13. In many places, trash pickup is legally controlled by just one company. This is known as

a. a regulated monopoly. c. price competition.

b. price discrimination. d. nonprice competition.

14. Which of the following pieces of legislation prevents monopolies from forming and hinders price fixing:

a. Clayton Act c. Sherman Antitrust Act

b. Robinson-Patman Act d. Celler-Kefauver Antimerger Act

15. One way that competition benefits business is by encouraging the creation of

a. new companies. c. unrelated firms.

b. more regulations. d. limited resources.

16. What motivates businesses to produce efficiently and sell effectively?

a. The desire to spend money c. The need for recognition

b. The hope of making a profit d. The chance to start a trend

17. One of the ways that competition benefits customers is by encouraging businesses to

a. develop fewer new products to sell. c. improve their existing products.

b. increase the price of their products. d. reduce the number of their services.

18. Which of the following is a direct benefit to consumers of the effects of competition:

a. Higher product prices c. Wise use of resources

b. Wider product selection d. Fewer new businesses in the market

19. Because of competition, people in our society enjoy

a. a narrower selection of goods or services.

b. fewer changes in existing goods or services.

c. government control of our economic system and businesses.

d. a higher standard of living than that of people in many other countries.

20. One way that competition helps to build a prosperous society is by

a. replacing small businesses with large ones.

b. creating government legislation.

c. creating new jobs.

d. increasing the money supply.

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