Business Economics and Business and Commercial Knowledge - 3 mtp MTP

1. When rent control is imposed above the current market price it will: (a) increase the quantity of rental housing demanded. (b) reduce the quality of rental housing. (c) create a shortage of rental housing. (d) create no impact on the market.

2. Inacapitalist economy, profit is socially desirable because it: (a) reallocates wealth from small firms to large firms. (b) attracts resources to the most desirable types of production. (c) allows firms to operate at higher levels of cost. (d) permits firms to hire more workers and thereby reduces the unemployment rate.

3. The tendency for managers to operate a firm in a way that maximizes their personal utility rather than the firm's profits is referred to as the: (a) consumer utility incentive. (b) principal—agent problem. (c) hidden agenda scenario. (d) Modigliani hypothesis. 4 What social function is served by profits in a capitalist economic system? (a) Taxes on profits support government programs. (b) They provide an incentive for the reallocation of resources. (c) Profits allow individuals to accumulate wealth and engage…

6. If we assume the following scenario: as the average income of the consumer increases the demand for “fast” food decreases, then we can assume that “fast” food is: 348 10. 11.

(c) None of the above is correct. (d) Either of these The price elasticity of demand for a good will tend to be more elastic if: (a) the good is broadly defined (e.g., the demand for food as opposed to the demand for carrots). (b) the good has relatively few substitutes. (c) along period of time is required to fully adjust to a price change in the good. (d) None of the above is true. If cross-price elasticity between goods…