Midterm - Microecon

 Which is LEAST likely to cause an increase in demand? 

•  a new ad campaign featuring a prominent celebrity
•  an increase in the price of a substitute 
•  a decrease in income 
• an expectation of higher future prices 

 A price floor is problematic in a market because it leads to

• surpluses
•  shortages
•  decreased productivity
• increased taxes. 

If the price of a product falls, which is true regarding demand? 

• demand decreases 
• demand increases 
• quantity demanded decreases 
• quantity demanded increases 

In the United States economy, the role of money is to 

•    set prices on goods and services
• facilitate exchange between buyers and sellers
• control inflation
• create jobs in the factor market

 Which provides the greatest incentive for entrepreneurs to take risks? 

• progressive taxes 
• prices 
•  profits 
•  production possibilities 

 Arrows 4 and 7 on this circular flow diagram demonstrate 

• the flow of land, labor, and capital 
•  prices
•  taxes. 
•  money flow

What is the main difference between pure competition and monopolistic competition? 

•   firms in pure competition make more profits 
•  firms in pure competition have no substitutes to their goods 
• firms in pure competition are selling nearly identical, rather than differentiated goods 
• firms in pure competition rely more heavily on advertisin

When the income in households increases, what is the likely result? 

• The demand curve shifts to the left
• The supply curve will shift to the left
• The supply curve becomes vertical
• The demand curve shifts to the right 

Sellers enter a market looking to make as much money as possible by offering a good or service.  Buyers enter a market looking to spend as little as possible for a good or service.  This interaction determines the 

•  production possibilities curve
• productivity of a business
•  market clearing price of a good
•  economic system of a country

Changes in quantity demanded of a good or service due to changes in the price of that good or service is MOST DIRECTLY related to which economic concept? 

• consumer sovereignty 
•  economic equity 
•  price elasticity of demand 
•  opportunity cost