Micro Test Review

Based on the circular flow of business, what are two ways that households impact the economy?

• They provide wages and products for consumption.

• They purchase resources and provide social services.

As the supply shifts from S1 to S2, what can be inferred about the quantity demanded?

• The quantity demanded will increase.

• The quantity demanded will decrease.

• The quantity demanded will not be affected.

• The quantity demanded cannot be determined.

Correctly identify the outcome if the price of burritos in Colemanville drops from $7 to $4.

$4 - 900 demanded

$5 - 750 demanded

$6 - 700 demanded

$7 - 500 demanded

$8 - 300 demanded

$9 - 100 demanded

• 900 burritos will be supplied.

• A quantity of 500 burritos will be demanded.

• The quantity demanded of burritos will rise by 20%.

• A quantity of 400 additional burritos will be demanded.

• A quantity of 900 additional burritos will be demanded.

A significant summer drought takes place in several states, including Iowa, Nebraska, Illinois, Minnesota, Indiana, and others. Because of the drought, the corn crop is severely damaged and limited for market. How will the drought and damage to the corn market likely affect the overall price of goods?

• The drought and damage to the corn market will likely have little effect on the overall price of goods, since corn production is extremely small in the United States.

• The drought and damage to the corn market will likely have little effect on the overall price of goods, as most Americans have excluded starches, like corn, from their diets.

• The drought and damage to the corn market will likely have a great effect on the overall price of goods, as corn-producers are required members of the Federal Reserve Board of Governors.

• The drought and damage to the corn market will likely have a great effect on the overall price of goods, as corn is used as a component for many goods produced and sold in the United States.

• The drought and damage to the corn market will likely have little effect on the overall price of goods, as substitution of U.S corn production from an overseas market will be inexpensive and easily available.

During Halloween, candy makers accurately anticipate the increased demand for candy for all of the parties and Trick-or-Treat. Manufacturers work hard to make sure the supply of candy and the demand for candy increase the

• the price would not change

• the price would rise to make up for the loss of profits

• the price would fall to move the excess supply of candy

• not enough information

What will happen to the price of candy on November 1, if there were a huge storm in the area and it didn't allow for shopping in the days leading up to (and the day of) Halloween?

• The price would not change.

• The price would fall to move the excess supply of candy.

• The price would rise to make up for the loss of profits.

• There is not enough information to make a determination.

Surplus? Shortage? Which of these situations is the MOST LIKELY result of a price ceiling being set below the equilibrium price?

• a market surplus

• a market shortage

• a decrease in demand

• an increase in equilibrium price

Why is minimum wage above equilibrium?

• minimum wage is a price floor for a shortage of job seekers

• minimum wage is a price ceiling for a shortage of job seekers

• minimum wage is a price floor for a surplus of job seekers

• minimum wage is a price ceiling for a surplus of job seekers

Which scenario most accurately illustrates the concept of "unlimited liability"?

• Larry and Bill started a new carpet cleaning business back in 2010. The business started turning a profit in 2015, and has been doing well, but Bill has decided that he wants out of the business, so he decided to sell his portion of the business to Larry and another man named Frank.

• Willie has independently owned and operated Willie's Car Wash since 1999, but the business has been struggling for the past 5 years. Willie has been borrowing money to keep the business afloat, but his business revenue continues to shrink while his debts are growing too large to manage. Next week, Willie is going to have to shut down the car wash for good.

• A new video streaming tech company, called Movie Viewing Streamer Corp, promised to become the next Netflix when it went public in 2016 with a price of $40 per share. Jim decided put his entire life savings into the stock, nearly $40,000. In fall of 2018, Movie Viewing Streamer Corp announced it was declaring bankruptcy and its stock fell to less than $1 per share.

• Steven is the sole proprietor of his kid's play business, Super Fun Kids, a large indoor play space. Because of the nature of the business, Steven pays very high insurance premiums to cover any accidents that take place in the play area. In August, a 7 year old girl was playing on the slide and sprained her ankle. Her parents' attorney has written Steven and Super Fun Kids asking to pay for her medical bills.

Corporations, as a separate legal entity, are subject to corporate taxes. Additionally, the stockholders in corporations are subjected to income taxes on the sale of stocks and income from dividends. This peculiar tax situation that corporations face is called

• "flat tax."

• "double taxation."

• "itemized deductions."

• "regressive tax."