Unit 2 - Supply and Demand

Who determines if a good is inferior?

• consumers

• government

• people selling the product

• Federal Trade Commission

What do prices help buyers and sellers make?

• targeted goods

• consumer expectations

• decisions

• variety of models

When the price of a good increases, what is the relationship to the Quantity Supplied?

• Producers will produce less

• Producers will make more profit so it makes more sense for them to produce more goods.

• There will be no change in the level of production

• The government will get involved

Starbucks drops prices by 20% on all coffee drinks for one week to celebrate their anniversary. Why will the Quantity Demanded for Starbucks coffee drinks be affected?

• market size

• related goods

• price

• expectations

How are income and demand related?

• an increase in price increases income

• a decrease in price decreases income

• an increase in income increases demand

• a decrease in income increases demand

Based on the graph of an individual market, what determines the price and the quantity produced of most goods?

• the interaction of supply and demand

• the availability of substitutes

• the consumer’s perception of necessity

• the availability of complementary goods

What is a basic principle of the law of demand?

• The higher the price the more people will buy

• Services are of interest in the same way that goods are.

• The higher the price the more suppliers will be willing to produce

• The lower the price the more people will buy

What is the smallest amount that can legally be paid to most workers for an hour of work?

• price ceiling

• price floor

• minimum wage

• equilibrium cost

If a new grocery store enters the Houston market. Why will it affect the Supply of groceries?

• number or producers

• expectations

• related goods

• technology

Why do fruit and vegetables have an elastic demand?

• because there are many vegetarians

• because people do not like fruits and vegetables

• because there is a wide variety of fruits and vegetables to choose from

• because of government regulation ensuring access to healthy foods