Unit 1 Review

The diagram represents a

• increase in demand

• decrease in demand

• change in quantity demand

• none of the above

The diagram represents a(n)

• increase in supply

• decrease in supply

• change in quantity supplied

• none of the above

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

Which is an example of the Law of Demand at work?

• The price of the pizza goes up when the price of cheese goes up.

• Demand for pizza goes down when tacos become more popular

• The price of pizza falls when the demand for pizza falls

• Demand for pizza rises when the price of pizza falls

Which explains why a supply line is upward sloping?

• the Law of Demand states there is an indirect relationship between price and quantity

• the Law of Supply states there is a direct relationship between price and quantity

• the Law of Supply compares marginal costs and marginal benefits in a constant rate

• the Law of Demand shows a positive relationship between two goods, creating the slope

Weather forecasters predict this summer will be much hotter than usual. What will probably happen to the demand for air conditioners?

• The demand will probably go up

• The demand will probably go down

Assume the image is showing the market for apples. Which of the headlines could indicate the pictured shift is occurring in the market?

• Pesticides on apples linked to mouth cancer.

• Storms destroy apple orchards.

• An apple a day really does keep the doctor away.

• New genetic strain leads to apple trees that produce twice as many apples.

The circular flow model of a market economy shows

• how profits are made

• what inputs are required for what outputs

• how many firms can support the needs of how many households

• the interactions between households and firms in the free market

What is opportunity cost?

• a graph that shows how much an economy can produce between 2 goods
• how much money something is
• the opportunity one has to give up in order to gain something else
• land, labor, capital, entrepreneurs

What is the production possibilities curve?

• a graph that shows how much an economy can produce between 2 goods
• how much money something is
• the opportunity one has to give up in order to gain something else
• land, labor, capital, entrepreneurs