Select the response that best completes the statement or answers the question.
1. What is the relationship between start-up costs and a competitive market?
a. High start-up costs are likely to make a market less competitive.
b. High start-up costs are likely to make a market more competitive.
c. Low start-up costs are likely to make a market less competitive.
d. There is no relationship between start-up costs and competitiveness.
2. In general, what happens to the price of a good or service when a shortage of that good or service occurs?
a. It remains unchanged while quantity demanded drops.
b. It increases until quantity demanded equals quantity supplied.
c. A price ceiling is imposed, lowering the price to meet the demand.
d. It decreases until quantity demanded equals quantity supplied.
3. When the price of a product goes down, what happens?
a. Existing producers expand, and new producers enter the market.
b. Some producers produce less, and others drop out of the market.
c. Existing firms continue their usual output but earn less.
d. New firms enter the market as older ones drop out.
4. A supply schedule is characterized by which of the following?
a. It shows the quantity supplied at only one price.
b. It shows the factors that could influence supply.
c. It is sensitive to changes in the costs of labor and parts.
d. It lists supply for a specific good at various prices.
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