economics test (unit 2)

what is the principe of the law of supply?

the higher the price, the larger quantity produced

equilibrium in a market means what?

the point at which quantity supplied and quantity demanded are the same

what is NOT true about cartels?

they always sell illegal goods and services

if the expectation is that the price of Nike shoes will decrease over the next year, then the DEMAND curve for Nike shoes right now ....

will shift to the left

if there is an increase in the population of college students, then the demand curve for textbooks ...

will shift to the right

apple can either make iPhones or iPads ... if the cost of making iPhones increases, the the SUPPLY CURVE for iPads ...

will shift to the right ..

if consumer income increases, the demand for products Y ...

will shift to the right if Y is a normal good

how do markets reduce transaction costs?

by putting producers selling different goods together in one location

how does a firm generally respond to a lower demand for its goods?

it raises prices

an agreement among members of an oligopoly to set prices and production levels ...

collusion

in what type of economy re prices determined solely by the interactions of firms and consumers, NOT by the government?

market economy

consumers demand fewer ______ goods when their incomes decrease

normal

what would not cause a shift in the supply curve for electric cars? a) government gives subsidies to electric car manufacturers b) the price of electric cars increases c) hurricane Irma destroys electric car factories in Florida d) a new electric car company enters the market

b) the price of electric cars increases

wheat is considered a commodity, because it is ...

basically the same product regardless of who sells it

if there is a surplus, price will eventually ____ to reach equilibrium

decrease

for a farmer that grows oranges, land would be a _____ cost, where as fertilizers and water would be _____ cost

fixed; variable

the main difference between perfect competition and monopolistic competition is that ...

in monopolistic competition sellers use non-price competition to differentiate their products from competitors

a company that can affect the price of a good for its own benefit has ...

market power

what is the relationship between start-up costs and a competitive market?

markets with high start-up costs are less likely to be perfectly competitive

when the government sets a price floor on earning, it is called which of the following?

minimum wage

if 2 shops sell the same merchandise but one offers a higher level of service, the service distinction is a form of ...

non-price competition

if the price of materials used to make sunglasses rise sharply, what happens to the price and the quantity sold of sunglasses?

price increases and quantity decreases

if the demand for eggs increases at the same time as an outbreak of Avian flu wipes out a large supply of eggs, what would happen to the equilibrium price and quantity?

price increases; quantity indeterminate

when market disequilibrium is caused by a price floor ...

price is higher than equilibrium price & Qd < Qs

according to the ______ view of government regulation, government officials place restrictions on business practices to promote fairness and competition in the marker place, and so consumers can benefit

public interest

when an economists says that the demand for a product has decreased, this means ...

quantity demanded is less at each possible price

the government can reduce the supply of some goods through ...

regulations and taxes

the total amount of money at firm receives by selling goods or services is the ....

revenue

why does a perfectly competitive market require many participants as both buyers and sellers?

so that no indivdual can control the price