Unit 2: Microeconomics Review

The willingness and ability to buy a good or service

• Demand

• Law of demand

• Supply

• Law of supply

Goods that can be used in place of one another

• Substitute goods

• Complementary goods

• Veblen goods

• Common access resources

A government payment to encourage or protect certain activities

• Subsidy

• Excise tax

• Sin tax

• Supply chain

What type of curve is this?

• Demand curve

• Supply curve

• Tariff curve

• Externality curve

Which of the following is NOT a factor that influences elasticity of demand?

• The number of available substitutes

• The proportion of income to make the purchase

• Time to make purchase decision

• Consumer tastes and preferences

Which of the following is NOT a factor that influences demand?

• The number of buyers

• Income

• Expectations

• Addiction or habit forming

What is the only thing that can change the quantity demanded for a good or service?

• Price

• Consumer tastes

• Consumer expectations

• The number of available substitutes

If substitutes are reduced for a good, how will this affect elasticity of demand

• Demand will become more inelastic

• Demand will become more elastic

• Demand will become perfectly elastic

• Demand will become unit elastic

What key term can be observed in this diagram?

• Market equilibrium

• Production possibilities frontier

• Elastic demand

• Inelastic demand

What is the law of demand?

• Price and quantity have a negative relationship

• Price and quantity have a positive relationship

• Price and quantity are unrelated

• Price and quantity move in the same direction