Econ Supply and Demand Review

Which statement best describes the law of demand?

• As price drops, people want to buy more.

• As price drops, people want to buy less.

• Price doesn't affect how much people want to buy of a good.

• As price increases, people want to buy more.

Which of the following best explains the law of supply?

• At low prices, producers want to supply more of their good.

• At high prices, producers want to supply less of their good.

• At high prices, producers want to supply more of their good.

• Producers always want to produce as much as possible, no matter the price.

What does this graphic imply about a market economy?

• Supply and demand balance each other out.

• Supply is stronger/heavier than demand.

• Demand is stronger/heavier than supply.

• Supply and demand never interact.

According to the graph, if the price of a good increases too much, what will consumers usually do?

• switch to a less expensive alternative

• keep buying the good to impress their friends

• demand the good in greater amounts, creating a shortage

• sue the producer

What happens to quantity supplied of a product as price increases?

• increases

• decreases

• stays the same

What is the marginal product of labor of the third employee?

• 11 toys

• 14 toys

• 3 toys

• 1 toy

Which of the following is INCORRECT?

• total cost + variable cost = fixed cost

• total cost - fixed cost = variable cost

• variable cost + fixed cost = total cost

• total cost - variable cost = fixed cost

Where can we see increasing marginal returns on the chart?

• Workers 1-3

• Workers 3-7

• Workers 7-8

• Workers 1-8

At what point are marginal returns considered to be diminishing?

• Worker 4

• Worker 8

• Workers 3-7

• Worker 0

Which of the following is NOT an example of a variable cost?

• rent

• wages for employees

• natural resources used as inputs

• sales commissions