Unit 3 Economics Test Review

What is the amount of a good or service that businesses have available to sell?

• scarcity

• competition

• supply

• demand

The demand curve generally slopes downward because:

• a higher price increases consumer demand

• a higher price decreases consumer demand

• that's just the way it is

• none of the above

If consumer incomes declines, then the demand for

• Generic Brand goods will increase.

• Luxury goods will increase.

• Complementary goods will increase.

• Brand name goods will increase.

A local store noticed that when it increased the price of milk from $2.50 per gallon to $3.50 per gallon, it sold the same amount of milk per week (165 gallons). Since everything else remained the same, we would say the .........

• Demand for milk is elastic

• The law of demand is true

• Demand for milk is inelastic

• Consumer don't like milk

One lesson to be drawn from our lesson on price ceiling and price floors is that......

• Government intervention in the economy should be routine and extensive

• The government can easily solve most economic problems

• Price controls work best if left in place over long periods

• In most cases, prices should be set by the interaction of demand and supply

During the summer months the demand for hot dogs increases, thus the demand for __________________ will also increase.

• Pizza

• Tacos

• Hamburgers

• Ketchup

The demand for Apple computers decreases? What is the best explanation for this?

• The price of Apple computers increased.

• The rate of inflation has decreased.

• Apple customers started to make more money.

• The price of other computer brands increased.

What type of prices for goods and services normally result from a lack of competition?

• Stable prices

• Lower prices

• No change in prices

• Higher prices

When demand for a product increases, the price of that product will tend to ____.

• Go up and down

• Decrease

• Stay the same

• Increase

Which of the following will probably cause prices to decrease?

• A new music player is very popular, and only one company makes it.

• A hurricane is coming, and only one store has any flashlights left.

• Half of the world's silver mines shut down.

• Many companies start making the same type of product