Economics Quiz Unit 2

The law of demand states that as price decreases

• wages decrease.

• production increases.

• demand increases.

• quality decreases.

Quantity demanded moves along the demand curve in response to changes in

• price.

• income.

• preferences.

• expectations.

Supply depends on the willingness and ability of

• donors to contribute.

• producers to produce.

• advertisers to promote.

• consumers to purchase.

According to the law of supply, what happens as price increases?

• The demand decreases.

• The quantity supplied increases.

• The supply curve becomes flat.

• The supply curve shifts to the left.

The degree to which the quantity demanded responds to changes in price is called

• elasticity.

• revenue.

• schedule.

• utility.

Which of these is the best example of diminishing marginal utility?

• A shortage of bike paths makes bicycles less useful.

• Bicycles become less useful as they get old and start to rust.

• Someone who has one bicycle will have less use for another.

• People with cars have less use for bicycles than people without cars have.

Which of these situations best illustrates market equilibrium?

• The price of soap does not vary much from week to week.

• Soap production ensures a good profit for the manufacturer.

• Everyone who wants or needs soap can easily afford to buy it.

• The amount of soap made matches the amount of soap that people want to buy.

How is the market-clearing price determined?

• It is fixed by each manufacturer.

• It is reached through trial and error.

• It is calculated by economic analysts.

• It is set by a government commission.

The equilibrium price is the price at which

• consumers start reducing demand.

• producers' total revenue is highest.

• demand and supply curves intersect.

• neither demand nor supply will shift.

Which of these might best signal furniture makers to cut back production?

• a fall in the cost of essential raw materials

• an increase in availability of skilled workers

• an introduction of competitors into the market

• a drop in the price consumers are willing to pay