Unit 2 Microeconomics Exam

Front

What is the primary function of households in a circular flow diagram?

Back

To demand goods and services and supply resources.

Front

In a circular flow model, what facilitates the flow?

Back

The movement of money.

Front

What does the law of demand state?

Back

As price decreases, quantity demanded increases.

Front

Which of the following is a determinant/shifter of demand? Options: Consumer income, Number of sellers, Technology, Cost of production

Back

Consumer income

Front

How can a surplus be created in a market? Options: a. By setting a price floor below equilibrium price, b. By setting a price ceiling below equilibrium price, c. By setting a price floor above equilibrium price, d. By allowing the market to reach equilibrium naturally

Back

By setting a price floor above equilibrium price

Front

What is the primary characteristic of a monopoly?

Back

Single seller

Front

How does investment in human capital affect the economy?

Back

It raises the standard of living.

Front

Which of the following best describes a sole proprietorship? Options: a. Owned by multiple people, limited liability, b. Owned by one person, unlimited liability, c. Owned by shareholders, limited lifespan, d. Owned by partners, shared decision-making

Back

Owned by one person, unlimited liability

Front

What is the primary role of businesses in the circular flow model? Options: a. To supply goods and services and demand resources, b. To demand goods and services and supply resources, c. To collect taxes, d. To provide public good

Back

To supply goods and services and demand resources

Front

Which market structure is characterized by many sellers and differentiated products?

Back

Monopolistic competition