EPF Unit 2-3 Review Questions

Much of the tea in the U.K. is imported from India. If wages for Indian tea workers rose, thus increasing input costs, how would this effect supply of tea in the U.K.?

• Supply would increase

• Supply would Decrease

• Supply would stay the same

• India is not a real country

In Jim's household, everyone consumes and enjoys milk. Recently, the price on milk increased by two dollars, but despite this increase, Jim and his family still continue to buy the same amount of milk, for they consider it a necessity. Jim's family's demand for milk would be considered fairly

• elastic

• inelastic

Which of the following are considered fixed costs? (There are two answers)

• Rent

• Firm operators' salaries

• Electricity

• Part-time workers' wages

Which of the following would be considered variable costs?

• Raw materials

• Electricity

• Part-time workers

• All of the above

What causes a shift in the demand curve?

• A decrease in price

• An increase in price

• A change in an area other than price

• A change in price and availability

The market equilibrium price is the price at which

• surpluses depress the number of goods supplied

• shortages and surpluses will have no effect on the market

• the government will not intervene in the market

• the quantity demanded is the same as the quantity supplied

A business is operating in a market of perfect competition. Which of these is a characteristic of this market?

• Consumers influence price

• There are differentiated products

• Suppliers influence price

• There are no barriers to entry

A large supermarket determines the price it pays its suppliers. Which term defines this market?

• Monopsony

• Monopoly

• Perfect competition

• Imperfect competition

When the economy experiences an expansion, it is most likely the case that

• GDP is increasing, unemployment is increasing, and inflation is decreasing

• GDP is decreasing, unemployment is decreasing, and inflation is increasing.

• GDP is increasing, unemployment is decreasing, and inflation is increasing

• GDP is decreasing, unemployment is decreasing, and inflation is decreasing.

12. A tax paid when purchases are made on a specific good, such as gasoline.

• Ad Valorem Tax

• Sales and Use Tax

• Franchise Tax

• Excise Tax