Unit 2 review

In a market economy, what determines price of goods?

• Substitute goods

• Supply and demand

• Economic policies

• Quality of goods

What happens to price on goods when demand is greater than supply (shortage exists)

• Profit will be smaller

• Price of demanded good increases

• Maufacturers stop making good

• Stores sell different models of good

What is it called when supply meets demand

• Surplus

• Equilibirum

• Shortage

• Equidistant

If the price of an ingredient of a good goes down, what would be the expected impact on demand?

• No change

• Demand disappears

• Demand decreases

• Demand increases

Law of supply states when price goes up, what happens to supply?

• No change

• Increases

• Decreases

• Demand increases

What is the maximum price for good called?

• Price floor

• Inflated price

• Price ceiling

• Price of doing business

Prices always move to what in a market economy

• Disequilbrium

• Price floor

• Price ceiling

• Equilibrium

If demand is not sensitive to price changes, demand can be called

• Elastic

• Equilibrium

• Inelastic

• Trade off

If price of an ingredient goes up in a product, what happens to the demand for that product

• Stays same

• Increases

• Decreases

• Unaffected

Demand that is dramatically affected by the increase or decrease in price of a good could be considered

• Elastic

• Inelastic

• Benefit

• Trade off