WFHS Unit 2 Micro Review

In the circular flow of the economy, what goes from individuals to businesses?

• payments for resources

• 4 factors of production

• employee salaries

• government regulation

In the circular flow of the economy, what goes from businesses to individuals?

• labor

• goods or services

• payments for goods or services

• factors of production

Different societies have used different types of money. The MAIN requirement for any type of money to become a medium of exchange is that it be

• Easy to carry

• Easy to divide into units

• Made of precious materials

• Accepted as payment

The law of demand states that...

• As the price of a product goes up, the quantity demanded goes down and vice versa.

• As the price of a product goes down, the quantity demanded goes down and vice versa.

• There is a direct relationship between price and quantity demanded

• None of the above

The law of supply states that...

• As the price of a product goes up, the quantity supplied goes down and vice versa.

• As the price of a product goes up, the quantity supplied goes up and vice versa.

• There is an indirect relationship between price and quantity supplied.

• None of the above

The law of demand predicts that when the price of movie tickets goes up,

• people will buy fewer movie tickets

• people will buy more movie tickets

• people will buy the same number of movie tickets

• more theaters will sell movie tickets

The market clearing price is also known as what?

• Where quantity supplied is equal to quantity demanded

• Equilibrium price

• Where the supply curve and demand curve intersect on a graph

• All of the above

The basic decision for a supplier is

• How much to produce without regard to demand

• The amount to offer for sale at various prices

• The willingness of consumers to purchase

• The ability of consumers to purchase items

How are producers and consumers in a market economy alike?

• Both are motivated by prices

• Both are motivated by profits

• Both are motivated by virtue

• Both are entrepreneurs

A new study shows that eating peanuts will lower your cholesterol. The demand for peanuts increases. This change in demand is caused by

• An increase in consumer’s income

• Consumer tastes

• Complements

• Price of substitutes