1. C: They provide better value so that customers purchase their products.
The better value of the products can be achieved by making the products have more benefit to the users , making the prices become cheaper, or by improving the customers service for the buyers of the product. By doing this, the company’s product would be seen more favorably compared to competitor’s product.
2. B: Buying raw materials
C: Spending time working
cost of production refers to the cost that directly incurred in the process of creating goods or services. Cost of productions generally covers things such as raw materials , labor salaries, the cost of machinery, and the cost of utilities such as water and electricity.
3. B: For whom to produce?
This economic question is asked in order to figure out the target demographic that companies would aim using their products. In order for this question to be answered, the companies first need to identify the problems that faced by the people and start to develop the product that can help the people solve that problems.
4. A. An employee is fired
Negative incentive refers to the things that could influence people to do something by creating some negative impacts for the people who failed to do so. This could include things such as firing an employee if he/she does not meet standard, cutting down their bonuses, preventing their promotions, etc.
5.B Charging duty taxes on foreign goods
Government action would be considered as an interruption tot he free trade if the action somehow give either positive or negative value to foreign organizations that affect them in the competition. Charging duty taxes in foreign goods would definitely achieve this. When being charged with duty taxes, the price of foreign goods would increase when it arrives in consumers market. This will give them disadvantage in the competition
6.C Producers work more quickly
Division of labor refers to the act of separating the total works into smaller parts and divide it among different people in the organizations. Business organizations do this in order to make their workers able to focus on the things that they good at while handling the rest to other colleagues that posses different skills.
7.B Prices are set by how much consumers will pay
In the free market, consumers had the right to refuse or agree to a purchase. This would give them more power since the companies would be forced to set up their price according to the consumers’ demand. If most consumers felt that the price does not equal to the value given by the product, the companies would eventually go bankrupt.
8.A Increased price of milk
When the price of a certain type of products increased, the number of people who had the purchasing power to buy them would also be reduced. These people later on would try to find alternatives in other products and gradually decrease the amount of milk that sold in the market.
9 B: Better Prices
C: Higher quality
When competitors arrive, business now would be forced to make decisions that make their products seen more favorable compared to the competitors’. This would make them either decreasing the prices for the consumers or adding additional values to their products so the costumers become more interested.
10.A Extending credit
People that have capital store their money to the bank in order to obtain security and interest benefits. People that do not have the capital would be able to borrow the money that already stored in the bank so they can grow their business.
From the activities above, the role of the bank is as the organization that extend the credit from those who had the capital to those who do not.