Economics Review

Chapter 4-7

When the government sets a maximum price that sellers may charge for a product, this is an example of what?

price ce

iling

price floor

price adjustm

e...

33% 33%33%1. price ceiling2. price floor3. price adjustment

You have recently received a raise at work, which of the following factors would this change?

market s

ize

consu

mer taste

inco

me

33% 33%33%1. market size2. consumer taste3. income

The law of demand states that:

consu

mers will.

..

consu

mers will.

..

consu

mers will.

..

33% 33%33%1. consumers will demand

more at low prices and less at high prices

2. consumers will demand more at low prices and more at high prices

3. consumers will provide less at low prices and more at high prices

You decide to eat a candy bar, and then you decide to eat a secondbut it doesn’t taste as good.

Which economic law are you experiencing?

substi

tution e...

elasticit

y

diminish

ing ma...

33% 33%33%1. substitution effect2. elasticity3. diminishing

marginal utility

Why are gas and salt considered demand inelastic?

there

are no s.

..

law of m

argina...

they a

re co

mpl...

33% 33%33%1. there are no substitutes

2. law of marginal utility

3. they are complementary goods

Which of the following is an example of a shortage?

quantity suppl...

quantity suppl...

quantity suppl...

33% 33%33%1. quantity supplied is greater than quantity demanded

2. quantity supplied is less than quantity demanded

3. quantity supplied is equal to quantity demanded

If the price of Pepsi increases, and you purchase Kool-Aid instead, this is an example of?

consu

mer exp

ec...

varia

ble costs

substi

tute

goo...

33% 33%33%1. consumer expectations

2. variable costs3. substitute goods

If you purchase an item that is considered demand elastic, what does that mean?

quantity deman...

quantity deman...

quantity deman...

33% 33%33%1. quantity demanded is equal to quantity supplied

2. quantity demanded changes significantly as price changes

3. quantity demanded changes very little as price changes

Which of the following companies best illustrates a monopoly?

Wal-M

art

Exxo

n-Mobile

DeBeers

Diamon...

33% 33%33%1. Wal-Mart2. Exxon-Mobile3. DeBeers Diamonds

The law of supply states that:

Businesse

s wil..

.

Businesse

s wil..

.

Consumers

will...

33% 33%33%1. Businesses will provide

more products at higher prices and fewer at lower prices

2. Businesses will provide fewer products at higher prices and more at lower prices

3. Consumers will purchase fewer products when they must buy them at higher prices

Economists predict that Madison County will reach a population of 90 thousand by 2015.

Which demand factor would this influence?

inco

me

market s

ize

consu

mer taste

33% 33%33%1. income2. market size3. consumer taste

Having a worker work on a particular aspect of production is an example of?

specia

lization

incre

asing re

t...

diminish

ing re...

33% 33%33%1. specialization2. increasing returns3. diminishing returns

Which of the following is not a factor in the “Costs of Production”?

specia

lization

incre

asing re

t...

diminish

ing re...

gove

rnment a

ct...

25% 25%25%25%1. specialization2. increasing returns3. diminishing returns4. government action

Which of the following statements best explains the concept of a monopoly?

There is

only ...

There is

more

...

There is

only ...

33% 33%33%1. There is only one seller

of a product that has several substitutes

2. There is more than one seller of a product that has no close substitute

3. There is only one seller of a product that has no close substitute

Fixed costs occur no matter how much a company produces, which of the following

would be an example of this?

cost

of materi.

..

shipping

mortg

ages on b...

33% 33%33%1. cost of materials2. shipping3. mortgages on

buildings

If you were to hire more workers and they cause more total output, which of the following is this

an example of?

incre

asing re

t...

diminish

ing re...

marginal u

tili...

33% 33%33%1. increasing returns

2. diminishing returns3. marginal utility

When a sports team limits rivals from creating a team in their general area is an example of what

type of monopoly?

gove

rnment

tech

nological

geogra

phical

33% 33%33%1. government2. technological

3. geographical

If the government does not want consumers to produce or consume a good, what can they

implement to discourage usage?

IRA

subsid

y

excise

tax

33% 33%33%1. IRA2. subsidy3. excise tax

If you hire too many workers and it causes your production to decrease, which of the following is

this an example of?

incre

asing re

t...

diminish

ing re...

shipping

33% 33%33%1. increasing returns

2. diminishing returns3. shipping

You manufacture cereal that uses raisins, unfortunately the price of raisins increases dramatically, which of the following

factors will change supply?

input c

osts

labor p

roducti

...

produce

r exp

ec...

33% 33%33%1. input costs2. labor productivity3. producer

expectation

The usage of robots to manufacture automobiles is an example of what?

input c

osts

labor p

roducti

...

tech

nology

33% 33%33%1. input costs2. labor productivity3. technology

The type of clothes that you purchased three years ago are no longer popular and in demand, why is that?

market s

ize

consu

mer taste

...

consu

mer exp

ec...

33% 33%33%1. market size

2. consumer tastes3. consumer

expectation

When the government pays for part of the cost of a good or service to encourage production and

consumption, this is an example of?

IRA

subsid

y

excise

tax

33% 33%33%1. IRA2. subsidy3. excise tax

When a business lowers their prices below rival businesses prices, this is an example of?

input c

osts

market s

ize

competitive

pr...

33% 33%33%1. input costs2. market size3. competitive pricing

What is it called when the government pays for part of the cost of a good or service to encourage production and

consumption of a good or service?

revenue

subsid

y

excise

33% 33%33%1. revenue2. subsidy3. excise

Which of the following scenarios would justify government rationing?

nation at war

flood in th

e M...

drought in

the...

33% 33%33%1. nation at war2. flood in the

Midwest3. drought in the deep

south

When does the market experience equilibrium?

when quan

tity ...

when quan

tity ...

when quan

tity ...

33% 33%33%1. when quantity

demanded is more than quantity supplied

2. when quantity demanded is less than quantity supplied

3. when quantity demanded is equal to quantity supplied

Which of the following is an example of a surplus?

quantity

supp...

quantity suppl...

quantity suppl...

33% 33%33%1. quantity supplied is greater than quantity demanded

2. quantity supplied is less than quantity demanded

3. quantity supplied is equal to quantity demanded

Who benefits the most from a surplus?

produce

rs

supplie

rs

custo

mers

33% 33%33%1. producers2. suppliers3. customers

When the government sets a price floor, what occurs?

shorta

ge occur..

.

shorta

ge occur..

.

surp

lus occu

rs...

33% 33%33%1. shortage occurs

because it is set below equilibrium price

2. shortage occurs because it is set above equilibrium price

3. surplus occurs because it is set above equilibrium price