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WorksheetsUnit 2 review
Total questions: 90
Worksheet time: 1hrs 9mins
When you buy a game system and games together, this is an example of which economic concept?
Complements
Substitutions
Elasticity
Economics
When you buy a PlayStation instead of an X-Box because the price of the PlayStation went up, this is an example of what?
Complements
Substitutions
Elasticity
Economics
According to the _____, quantity demanded and price move in opposite directions.
law of demand
demand curve
demand schedule
market demand
In a ____, most economic decisions are made by individuals looking out for their own interests.
free exchange
market economy
privatized economy
socialist market
When economists look at supply and demand schedules and/or supply and demand curves, what are the only two variables examined?
Price and Demand
Price and Supply
Price and Quantity
Price and Equilibrium Point
What determines if an item's demand is elastic?
If an item is on sale
If an item continues to be bought, despite the rise in price
If an item stops being bought because of a rise in price
If an item is not on sale
A ____ system allows businesses to compete for profit with a minimum of government interference.
Free Market
Traditional
Command
Mixed
_____ refers to the desire, willingness, and ability to buy a good or service.
Supply
Demand
Law of Demand
Market Supply
What is the term for the principle that suppliers will normally offer more for sale at higher prices and less at lower prices?
law of supply
supply schedule
law of demand
market demand
When a new producer of soap enters the market, and the supply curve shifts to the right, which determinant of supply shift is this an example of?
Number of Sellers
Subsidies
Producer Expectations
Input Costs
This graph demonstrates
A shift in the Supply Curve
A higher market price after the shift of the Demand Curve
A lower market price after the shift of the Demand Curve
No change in the market quantity after the shift of the Demand Curve
The graph below is an example of a
Demand Schedule
Demand Curve
Supply Schedule
Supply Curve
What is characterized by changes in conditions where supply and demand are out of balance?
Market Price
Market Disequilibrium
Market Equilibrium
What will happen if there is more supply in the market than there is a demand of the product?
shortage
surplus
equilibrium
What will happen if there is not enough supply in the market for a demand of the product?
equilibrium
surplus
shortage
What happens when there is excess demand - that is quantity demanded is greater than quantity supplied?
Market Surplus
Market Shortage
Market Equilibrium
A Market Economy is based on?
Goods and Services
Goods and Products
Supply and Demand
Service
What are the 3 basic economic questions?
What to produce? How To Produce? For whom to produce?
Who to produce? Why you produce? Like to produce?
Why to produce? Tell who to produce? Things to produce?
There are four types of economic systems. Most economies are _____.
Traditional
Command
Market
Mixed
What does the elasticity of demand measures?
How the changes in prices affect global economy.
How customers react to changes in prices.
How customers react to changes in quality.
The Price elasticity of milk is 1.4, therefore we can say that milk is...
Elastic
Inelastic
Unit elastic
The Price elasticity of soda is -0.8, therefore we can say that soda is...
Elastic
Inelastic
Unit elastic
The reason why Chevrolet cars are very elastic is because...
They can be easily replaced by other cars
No matter the price, people will always choose chevrolet
Infomation not given.
Some factors that affect price elasticity are...
The number of subtitutes and how dependant you are on the good.
The number of customers and producers of the good.
How dependant you are and the quality of the good.
Gasoline is inelastic on the short and the long run because...
It is very expensive.
We depend on oil to make it.
There are very few subtitutes to gasoline.
Price elasticity of supply is the responsiveness of
demand to a change in price.
price to a change in supply.
quantity supplied to a change in price.
price to a change in supply.
If the supply curve of a product is vertical, PES is equal to
0.
1.
-1.
infinity.
If storage of a good is cheap and readily available, supply is likely to be
relatively elastic.
relatively inelastic.
perfectly inelastic.
perfectly elastic.
If the firm have more spare capacity, then it will be possible for the firm to increase supply. This means supply is
Elastic
Inelastic
Unitary elasticity
When the price is more and the firms are able to produce more to take the benefit of this increase in price, then supply is said to be....
Elastic
Inelastic
Unitary elasticity
None of the above
If there are more firms producing more luxury items then supply of luxury items will increase. In such case, if there is any increase in price, the firms can supply more to make use of this rise in price.Supply will be....
Elastic
Inelastic
Unitary Elasticity
None of the above
In agriculture farming, it takes time to increase the supply of fruits and vegetables as the harvesting needs time. Hence supply will be less responsive to increase in price,nad supply will be ...
Inelastic
Elastic
Unitary Elasticity
None of the above
Relatively Inelastic Supply
percentage change in quantity is supplied is less than the percentage change in quantity supplied is less than percentage change in price
percentage change in quantity supply exceeds the percentage change in quantity supply exceeds the percentage change in price.
Market failure arises whenever firms
make a loss
replace machines with workers
create externalities
reduce expenditure on research and development
Market failure results in a misallocation of resources. In some cases, this can be corrected by the government
restricting the manufacture of goods that generate positive externalities
Providing public goods
subsidising all loss-making firms
placing a tax on merit goods
A situation of market failure is said to exist if;
buyers and sellers pay for the true opportunity costs of their actions
there are no externalities
the government provides merit goods free
third parties in society are affected and not compensated
When social costs are greater than private costs, there is a;
positive externality
negative externality
less than socially optimal output
socially optimal output
__________ goods are goods that are considered __________ for consumers but which are_________ by the market. One important reason for overprovision is that the good may have __________ consumption externalities, thus the market ________ resources in its production.
Excise; desirable; underproduced; positive; overallocates
Demerit; desirable; underproduced; positive; underallocates
Normal; needs; undervalued, elastic; frees
Demerit; undesirable; overproduced; negative; overallocates
In the price system of a market economy, prices are determined by
central planning.
market forces of supply and demand
political forces.
When there is a shortage of a product in a competitive market, it is usually the case that the
market price of the product will eventually increase.
market price of the product will eventually decrease.
quantity of the product exchanged in the market will eventually decrease.
If a news article about filthy conditions in a local restaurants alarms customers.
Demand will increase
Demand will decrease
Supply will decrease
What happens to the market of Coke, when price of Pepsi increases?
Quantity demanded of Coke rises
Quantity demanded of Coke falls
Demand for Coke rises
Supply for Coke rises
When the free market leads to a misallocation of resources in an economy it is...
Market failure
public good
a positive externality
a negative externality
Positive externalities are present if:
social costs exceed private costs
private benefits exceed private costs
production leads to private benefits
private benefits are less than social benefits
A good is non-excludable if
its price is zero
it is not possible to prevent non-paying customers from enjoying it
it is supplied by the government rather than the free market
one person's use affects the quantity available for others
A good that would be over-consumed in a free market is a
Merit good
Demerit good
New technology advances the rate at which furniture can be assembled. Why does this change the supply?
There is a change in cost of production.
The number of producers changes.
The expectations of consumers changes.
The output rate declines.
Mr Coyote goes to the ticket booth to buy tickets for a Spurs game. Mr. Coyote is told that the game is sold out and no tickets are available. Which best explains why there are no basketball tickets available?
The arena forgot to print enough tickets.
The supply of tickets was greater than the demand.
The arena charged too much money for each ticket.
The demand for tickets was greater than the supply.
Which of the following would NOT be a determinant of demand?
The price of related goods
Income
Tastes
The prices of the inputs used to produce the good
If the price of a substitute to good X increases, then
The demand for good X will increase.
The market price of good X will decrease.
The demand for good X will decrease.
The demand for good X will not change.
Suppose you like banana cream pie made with vanilla pudding. Assuming all other things are constant, you notice that the price of bananas is higher. How would your demand for vanilla pudding be affected by this?
It would decrease.
It would increase.
It would be unaffected.
There is insufficient information given to answer the question.
A higher price for batteries would tend to
increase the demand for flashlights.
decrease the demand for electricity.
increase the demand for electricity.
increase the demand for batteries.
What will happen in the rice market if buyers are expecting higher prices in the near future?
The demand for rice will increase.
The demand for rice will decrease.
The demand for rice will be unaffected.
The supply of rice will increase.
Refer to Graph 4-1. The movement from point A to point B on the graph shows
a decrease in demand.
an increase in demand.
an increase in quantity demanded.
a decrease in quantity demanded.
What does the Latin phrase Ceteris paribus literally mean?
"other things being equal."
"after this therefore because of this."
"to respond slowly to a change in price."
"There's no such thing as a free lunch."
What best refers to the situation when the price of a good or service changes?
there is a movement along a stable demand curve.
demand shifts in the opposite direction.
demand shifts in the same direction.
supply shifts in the opposite direction.
Other things equal, when the price of a good rises, the quantity supplied of the good also rises. What best refers to this situation?
The law of increasing costs.
The law of diminishing returns.
The law of supply.
The law of demand
Which of these best describes the law of demand?
if prices go up, quantity demanded will fall and if prices go down, quantity demanded will go up
if prices go up, quantity demanded will also go up and if prices go down, quantity demanded will also go down
there is no law of demand, each situation is unique and demand and prices cannot be predicted
prices will go up for certain goods when quantity demanded goes up and vice versa
A change in the price of a good causes people to buy more or less of an item. This best describes the concept of
the demand curve
change in quantity demanded
change in demand
elasticity
Water has seen an increase in demand 8% this summer, while the price has decreased 12%
1.5 inelastic
1.5 elastic
.67 inelastic
.67 elastic
Wheat has seen a decrease in demand of 5%, while the price has increased 7%
1.4 inelastic
1.4 elastic
.71 inelastic
.71 elastic
Americans revive their love of SUV’s and the newly remodeled, but still “gas guzzling” Hummer. What happens to the market for gasoline?
Demand for gasoline will decrease
Demand for gasoline will increase
Demand for gasoline will stay the same
Demand for insurance agents will decrease
If the price of a good or service decreases what will happen to the demand for it?
increase
decrease
stay the same
who knows
If the price of printers goes down, what happens in the market for ink cartridges?
Supply increases.
Supply decreases.
Demand increases.
Demand decreases
What goes on the horizontal axis (x axis) of a demand graph?
price
quantity demanded
quantity supplied
change in demand
What goes on the vertical axis (y axis) of a demand graph?
price
quantity demanded
quantity supplied
changes in demand
