Unit 2a Review

A farmer sells a truckload of grain for $1000. He then takes the cash to the tractor dealer and buys a new set of tires for his cultivator. This illustrates that one function of money is to be a

• medium of exchange

• measure of value

• store of value

• bartered item.

Which statement about the circular flow model is CORRECT?

• Businesses earn income from both the factor and product markets.

• Households earn income from both the factor and product markets.

• Households earn income from the product market, and businesses earn revenue from the factor market.

• Households earn income from the factor market and businesses earn revenue from the product market.

Before money was invented, how were goods and services exchanged?

• Kings evenly distributed items.

• Merchants and customers bartered.

• Individuals were self-sufficient.

• Priests evenly distributed items.

A wal-mart in Lawrenceville, Georgia would be considered which type of market?

• It is a product market, because goods and services are sold there.

• It is a resource (factor) market, because productive resources are sold there.

• It is both product and resource (factor) markets, because goods, services, and resources are sold there.

• It is neither, because the circular flow of economic activity has nothing to do with what is being bought and sold at wal-mart.

Money that individuals receive from businesses return to businesses in

• the factor markets

• the product markets

• the purchase of land

• the payment for resources

While supply is based on the willingness of producers to supply a good or service, demand is MOST LIKELY based on

• the needs of governments.

• the ease of a product's use.

• the price of a good or service.

• the availability of complementary goods.

Supply is the total amount of a good or service that is available to ______.

• consumers

• distribute

• purchase

• redistribute

When makers of a product increase the price, consumers are often unwilling to continue to purchase the product (or at least as much of the product). This is known as:

• a price ceiling

• the law of supply

• the law of demand

• equilibrium price

Supply is the total amount of a ______ that is available to consumers.

• good or device

• good or service

• product or warranty

• service or industry

To have demand, what must you have?

• a desire for the item.

• the ability to pay for the item.

• the desire and the ability to pay for the item.

• a basic need and a constant supply of the item.