Economics Unit 2 How Markets Work

When a consumer is willing and able to buy a good or service, he or she creates which of the following?

• consumption
• demand
• elasticity
• allocation

How is price related to quantity demanded?

• If the price is expected to rise, quantity demanded will decrease.
• If the price is expected to fall, quantity demanded will decrease.
• If the price is expected to rise, quantity demanded will rise.
• Future price is not related to current demand.

What kind of table lists the quantity of a good that a person will buy at different prices?

• demand schedule
• demand curve
• market demand schedule
• market demand curve

What is the basic principle of the law of demand?

• The higher the price, the more people will want the good.
• Everyone has a limited income that they will spend.
• When a good's price is lower, people will buy more of it.
• Services are of interest in the same way that goods are.

What is the basic principle of the law of supply?

• The higher the price, the more people will want to produce the good.
• Everyone has a limited supply that they will make.
• When a good's price is lower, people will produce more of it.
• Services are of interest in the same way that goods are.

Which of the following is a good that might not be bought when prices rise?

• complement
• substitute
• inferior good
• luxury

The supply curve slopes...

• up and to the right.
• up and to the left.
• down and to the right.
• down and to the left.

Which of the following illustrates the concept of diminishing marginal utility?

• Fred keeps buying cars.
• Fred stops buying cars.
• Fred doesn't like the last car he bought.
• Fred receives less enjoyment from his 5th car than his 4th.

A change in quantity supplied means a change in...

• government regulations.
• productivity.
• price.
• technology.

Due to a fire in the Jiffy factory, the price of peanut butter has increased by 50%. As a result, the quantity demanded of jelly has decreased significantly. This is because peanut butter and jelly are _______ goods.

• luxury

• complementary

• inferior

• grocery