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MGTA05H3 Study Guide - Final Guide: Monopolistic Competition, Dial Tone, Sole Proprietorship

Management (MGT)
Course Code
H Laurence
Study Guide

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Review of Week One
Question The Toronto General Hospital cannot be called a business because:
The hospital does not accept money from patients
The hospital does not produce a profit for its owners
The hospital has patients, not customers
The hospital does not provide a product
"Corner Variety" is a corner store that sells newspapers, milk, cigarettes, pop
and other convenience items. In 2012, Corner Variety sold $500,000 worth of
goods. Corner Variety paid $250,000 for the goods it purchased. It paid
$30,000 in rent and $40,000 to each of 2 students who worked in the store. All
other expenses (fees, taxes, insurance, water, heating, etc.) came to a total of
The profit made by Corner Variety in 2012 was:
In 2012, Corner Variety decided not to sell cigarettes, as the owner was
opposed to the use of tobacco. In 2012, the store's sales were $20,000 less than
they had been the previous year. Corner Variety, however, saved $10,000 from
not having to purchase cigarettes. If all other revenues and expenses were the
same, in 2012 the profit made by the Corner Variety would have been:
greater by $10,000, as the store had fewer expenses
the same as the previous year, as both revenues and expenses went down
less by $20,000, as the store lost revenue
less by $10,000 as the store had lower revenue and expenses
Question Mary is the only investor in MCo. Her return on investment in year 2 is
negative in which of the following scenarios?
The profit from year 2 is less than the profit from year 1
The profit from year 2 is the same as the profit in year 1, but Mary has invested
an additional $100,000 in the business
The profit from year 2 is zero
MCo has a loss in year 2
Question A business uses some form of land and raw materials, labour, capital and
entrepreneurial spirit to make a profit. An accounting firm provides a service to

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its clients based on the professional expertise of the accountants who work in
the firm. In an accounting firm, the most important factor of production is:
land and raw materials
entrepreneurial spirit
Review of Week Two
Question In an economy that dominated by market transactions
producers and governments agree on how much to produce
economists, planners and politicians determine how much to produce
the amount of currency available for loans determines how much to produce
transactions between producers and consumers and prices determine how
much to produce
You are visiting a rural town in Wyoming, touring the Rocky Mountains.
Suddenly, your car breaks down on the road just past a little town. No one has
passed you in the last hour. You flip open your cell phone, only to discover
there is no signal. You walk back to the little town, and discover nothing is
open. But look -- there on the corner is a pay phone booth. Who knew such
things still existed? There is even a phone book, and you find the number for
an emergency towing service in the next town. You pick up the receiver and,
sure enough, there is a dial tone. You dial the number, and the operator comes
on to tell you that the number is a long distance call, and will cost you $6. You
are appalled -- your cell phone makes calls all over the U.S. for free. At this
point, the market for telephone service is
a monopoly
an oligopoly
a market characterized by monopolistic competition
a perfect market
You have agreed to take your 2 young neices out for the day. They are 6 and 8
years old. You quickly discover that they want to eat frequently, and that they
have strong preferences in what they eat. As lunch time approaches, you drive
past a strip of malls and restaurants. The older neice spots a MacDonalds' arch
and shouts, "Let's go to MacDonalds for lunch." The younger one joins in,
"Yeah, MacDonalds." There are lots of other choices, including the restaurant
that has caught your eye, Frans Finest Hair Cutting and Dim Sum. At this
point, the market for local restaurants is
a monopoly
an oliopoly
a market characterized by monopolistic competition
a perfect market
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