Apex Economics Unit 2 TEST review

In the circular flow of goods, what is the function of households?

• designing new products

• manufacturing consumer goods

• purchasing goods at the product market

• producing natural resources

Which part of the circular flow produces workers?

• product market

• resource market

• households

• businesses

Which part of the circular flow model provides materials to households?

• businesses

• households

• product markets

• resource markets

Raw materials are found in which part of the circular flow model?

• households

• businesses

• product markets

• resource markets

An increase in price will lead to

• increased demand

• decrease in supply

• decreased demand

• more interested buyers

When do business owners increase their supply?

• when the price goes up

• when there is a sale

• when demand is down

• when there is a recall on the product

According to the law of demand when does the demand increase?

• when the price goes down

• when the supply increases

• when the supply decreases

• when stores refuse to stock

How do businesses determine equilibrium price?

• They perform numerous studies

• They set a price where demand matches the quantity they will supply

• They set a price where the demand is less than quantity supplied

• They set a price where the demand exceeds the supply

When might a company make the decision to decrease the supply?

• new technology makes production cheaper

• new regulations from the government

• the price is going up for the product

• there are more workers available

If consumers expect the price to drop in the future, how would this effect demand?

• there would be an immediate increase in sales

• there would be a drop off in sales

• the demand would stay exactly the same

• demand will rise now, despite future expectations