Econ Midterm Review

In a free market, prices are mainly decided by:

• The government

• Supply and demand

• Only the supplier

• Random changes

The law of supply says:

• As price increases, supply decreases

• As price increases, supply increases

• As demand increases, price decreases

• As supply increases, demand decreases

When price is low, the law of demand says people will:

• Buy more

• Buy less

• Stop buying

• Buy the same

A shortage happens when:

• Supply is higher than demand

• Demand is higher than supply

• Price is at equilibrium

• Price is high

A surplus happens when:

• Price is above equilibrium

• Price is below equilibrium

• Supply equals demand

• Demand is high

At equilibrium:

• There is no shortage or surplus

• There is always extra supply

• Prices are always low

• Consumers buy less

A country’s leaders set production goals for every factory, deciding how many shoes, cars, and clothes must be made. Businesses cannot adjust even if demand changes. Which economy is this?

• Traditional

• Market

• Command

• Mixed

A village passes down farming and hunting practices through generations. People trade what they produce instead of using money. Which economy is being described?

• Market

• Mixed

• Traditional

• Command

A nation offers free university and healthcare for all, but still allows restaurants, stores, and private companies to operate. Which system is this?

• Command economy

• Mixed economy with socialist features

• Pure market economy

• Traditional economy

A clothing brand grows successful worldwide because customers love its products. The government has little involvement, and profits depend on sales. Which economy is this?

• Market economy

• Command economy

• Mixed economy

• Traditional economy