Honors Econ Semester Exam

Scarcity arises because all societies have

• Limited resources to satisfy unlimited wants
• Limited needs and unlimited wants
• Unlimited resources to satisfy limited wants
• Unlimited needs and limited wants

What does the Law of Supply state?

• Producers will increase supply as prices rise
• Producers will decrease supply as prices rise
• Consumers will increase demand as prices rise
• Consumers will decrease demand as prices rise

Which of the following is NOT a determinant of supply?

• Technology
• Consumer preferences
• Number of producers
• Wage rates

According to the Law of Demand, what happens when prices decrease?

• Demand decreases
• Demand increases
• Supply decreases
• Supply increases

What is the Income Effect?

• The effect of price changes on consumer demand
• The change in quantity demanded due to a change in income
• The impact of advertising on consumer choices
• The relationship between supply and demand

Which of the following best describes elasticity?

• The responsiveness of demand to price changes
• The fixed nature of supply regardless of price
• The stability of prices in a market
• The total quantity of goods produced

What is the substitution effect?

• The increase in demand for a product when its price rises
• The decrease in demand for a product when its price rises
• The change in quantity demanded due to the availability of substitutes
• The effect of consumer income on demand

What does the equilibrium price represent?

• The highest price consumers are willing to pay
• The price at which supply equals demand
• The lowest price producers can charge
• The price set by the government

What is disequilibrium?

• When supply and demand are equal
• When there is a surplus or shortage in the market
• When prices are stable
• When the government intervenes in the market

Which sector is NOT part of the circular flow of money?

• Product market
• Consumers
• Foreign sector
• Factor market