ECON 1000 Chapter 4 Study Guide

Which of the following could NOT result in a “Change in Supply” for “I-Pads ”?

• An improvement in the technology used to produce I-Pads.

• A decrease in the price of plastic (an input used in the production of I-Pads).

• An increase in the market price of I-Pads.

• A decrease in the number of sellers of I-Pads.

Which markets are represented in the simple “Circular Flow Diagram”?

• Markets for “Imports and Exports” and markets for “Factors of production.”

• Markets for “Goods and Services” and markets for “Factors of Production.”

• Markets for “Financial Assets” and markets for “Imports and Exports.”

• Markets for “Goods and Services” and markets for “Financial Assets.”

One of the principle functions of money is that it serves as a “unit ofaccount.” This role could be described by recognizing that money

• is an asset used as payment when purchasing goods and services.

• is an asset that can be used as a means to hold wealth.

• is used as a basic unit of measuring economic activity.

• None of the above answers are correct.

During the last several decades, health officials in the United States have argued that eating too much beef might be harmful to humans. As a result, there has been a significant decrease in the amount of beef produced. Which of the following best explains this decrease in production?

• Government officials ordered beef producers to produce relatively less.

• Animal Rights Activists have made it difficult for both buyers and sellers of beef to freely trade the good in free markets.

• Beef producers (whose primary concern is the health of their customers) decided to produce relatively less beef.

• Individual consumers (concerned about their own health) decreased their demand for beef (resulting in a decrease in both the equilibrium price and equilibrium quantity of beef).

Supply

• refers to the entire relationship between the price of a good and the number of units that firms are willing and able to sell, all other factors fixed.

• refers to the amount of a good that firms are willing to sell at the equilibrium price.

• provides a summary of the behavior of buyers in a market.

• More than one (perhaps all) of the above answers is correct.

The “Circular Flow Diagram”

• summarizes the different combinations of output that a society could produce, given their currently available productive resources.

• illustrates how Supply and Demand interact to determine the unique equilibrium price and equilibrium quantity in a market.

• illustrates the interaction between households and firms in a simplified free market economy.

• None of the above answers are correct.

Privately owned enterprises in a free market economy have a primary goal of

• exploiting workers.

• earning as large of a profit as possible.

• tricking consumers into thinking that they are “environmentally conscious.”

• More than one (perhaps all) of the above answers is correct.

An increase in income will result in a decrease in demand for ____

• a normal good

• an inferior good

• a substitute good

• a complementary good

Between August 2013 and August 2016 there was an increase in both price and quantity traded of corn. This change in market equilibrium outcome would result from

• an increase in Demand.

• a decrease in Demand.

• an increase in Supply.

• a decrease in Supply.

_______ refers to someone who organizes, manages, and assumes the risks of a firm, taking a new idea or a new product and turning it into a successful business.

• An Invisible Hand

• An Entrepreneur

• A Central Planner

• A Social Surplus