Review for Microeconomics Test
At which price is equilibrium?
$1.25
According to the graph below, what is the cost of a DVD when the quantity demanded by the market is 300?
$15
According to the graphic above, how many DVDs will suppliers sell for $12?
150
If a price floor was set at 320, what quantity would be purchased?
20
What is the Equilibrium Price?
3
At which quantity does supply and demand reach equilibrium?
700
Which of the following will cause an increase in demand for snowboards?
A decrease in the price of lift tickets at resorts in Colorado
A traditional economy is defined as:
A market with no competition where bartering occurs to obtain goods
When a third party member is affected by the interaction of a buyer and seller, we call this
An externality
An improvement in the technology used to produce a good will result in which of the following?
An increase in the supply of the good.
Thousands of people leave a small town due to a factory closing down. Sales at the local grocery store become slow. What causes this change?
Change in the number of buyers
Which type of economy is controlled by the government?
Command
Which type of economy has central ownership and lack of individual choice?
Command Economy
A mixed economy combines two different economic types. Which two economic types are combined?
Command and Market Economies (NOT SURE)
What happens to demand of Coke when the price of it's substitute item falls?
Demand shifts left
Which of the following is NOT a part of the circular flow model of the U.S. economy?
Foreign nations
Mixed economy
France, Sweden
________________ is the freedom of individuals and businesses to operate with a minimum of government interference or regulation
Free enterprise
In the circular flow model, what do businesses provide to individuals and households?
Goods and services
Which of the following explains the upward slope of the supply curve?
High prices motivate suppliers to produce more. (NOT SURE)
In a market economy, who ultimately owns all the economic resources?
Households
Which is the strongest motivating force within a market economy system?
Individual Self-Interests
At this price:
Low prices encourage buyers but discourage sellers
What type of economy does the United States have?
Market
Which type of economy is run by the businesses & business owners?
Market
In the circular flow model, what do individuals receive from businesses in return for their labor?
Money
Which of the following is the best definition of a negative externality?
Negative effects on bystanders outside of a market from consumer and producer transactions.
Which of the following would most likely result in a decrease in the equilibrium price of oranges?
New studies suggest that oranges contain traces of cancer-causing substances due to pesticide residue
Which of the following is likely to increase the demand for peanut butter?
News that insects have destroyed much of the peanut crop and that there will be less peanut butter on the shelves in three months.
Traditional economy
North Sentinelese, Amazon tribes
Which statement expresses a central idea of how the laws of supply and demand work?
Prices are determined by the interaction of producers and consumers.
Jamaal was paid for his work at a baseball game last Friday. He went to the store and bought a video. When Jamaal paid for the video, what type of market did he participate in?
Product Market
What happens when the same amount of input, used in the same amount of time, produces a greater amount of output?
Productivity goes up
At equilibrium price:
Quantity supplied = quantity demanded
In the United States economy, what do businesses buy from consumers?
Resources
In the circular flow model, what do individuals SELL to businesses
Resources
Consumers experience an increase in wages; the demand curve will move to the
Right
The price of chicken decreases; what will happen to the demand curve for turkey?
Shift Left
An observer of the graph would call this a(n):
Shortage
__________ occurs in the economy when unemployment and inflation are both high.
Stagflation
Assume the image is showing the market for apples. Which of the headlines could indicate the pictured shift is occurring in the market?
Storms destroy apple orchards.
Which description best describes the information in this graph at this price?
Supply exceeds demand
An observer of this graph would call this a(n):
Surplus
What does this graph show?
Surplus
What economic model best represents the factor and product markets?
The Circular Flow
According to the circular flow model, where is labor exchanged for money?
The Resource Market
If the number of consumers in the market for good A decreases, what will happen to the equilibrium price and quantity of good A?
The equilibrium price and quantity will both decrease. (NOT SURE)
The factors of production are owned by ________________ in a command economy.
The government
How is an increase in the price of a good illustrated on a supply graph?
There is upward movement along the supply curve.
Which type of economic system bases its decisions on custom?
Traditional Economy
Command economy
U.S.S.R., North Korea
Market economy
United States?
Which of the following is NOT an example of a public good or service?
Wal-Mart
What factor could have caused the demand to decrease?
a decrease in the price of a substitute
Pollution caused by automobiles is an example of
a negative externality.
Supply
amount of a good or service that producers will produce at a given price
Which of the following would not shift the supply curve for iphones?
an increase in the price of iphones
Law of supply
as price increases; producers produce more: as price decreases; producers produce less
law of demand
as the price of a good or service increases amount demanded decreases and vice versa
A change in quantity demanded is shown
at various points on the demand curve
Which of the following is the best definition of a positive externality?
benefits enjoyed by bystanders outside the market transactions of a good
Academy sells a soccer ball to James. What can you tell about the transaction? The money used in this transaction was paid to the ______________ sector.
business
Academy sells a soccer ball to James. What can you tell about the transaction? James was the ____________ of the soccer ball in the ___________ market.
buyer; product
This part of the market determines DEMAND
buyers
Inelastic supply
changes in price do NOT greatly affect the amount produced
Elastic supply
changes in price greatly affect the amount produced
Which of the following BEST describes the flow of economic activity in a market system?
circular
Government owns resources and controls production, prices, and wages.
command
Goods that are bought and used together are
complementary goods
Following a prolonged power outage, the price of flashlights normally increases significantly. If cities had passed laws prohibiting price increases for flashlights, during power outages such laws would most likely
create a shortage of flashlights
Assume that people like onions on their hamburgers. If the supply of hamburgers decreases, the demand for onions will most likely
decrease because hamburgers and onions are complements
The movement from Point A to Point B represents a(n)
decrease in the quantity supplied.
What does this curve represent?
demand
The man's question demonstrates that he
does not understand the relationship between supply and demand
The market demand curves slopes downward because prices go
down as demand goes up
Capital goods
durable machines used to create goods and services
diminishing utility
each new unit acquired is less important than the one you already own
Point at which supply and demand come together
equilibrium
When quantity supplied and quantity demanded is equal
equilibrium
The resources needed to produce goods and services are called
factors of production
substitute goods
goods that can used in place of one another; like jelly and jam
complementary goods
goods that usually work with one another; like peanut butter and jelly
Academy sells a soccer ball to James. What can you tell about the transaction? James is part of the _______________ sector.
households
Scarcity exists because
human wants exceed the productive capacity of the economy
The diagram represents a
increase in demand
For the law of demand, as price rises, what happens to quantity demanded?
it goes down
Prices and wages are determined by producer supply and consumer demand.
market
When the government sets a price floor on earned income, it is called which of the following?
minimum wage
Government regulates certain industries.
mixed
Individuals own most resources and determine what and how to produce.
mixed
Legal maximum that can be charged for a good.
price ceiling
inelastic demand
price changes do not greatly affect the amount demanded
elastic demand
price changes greatly affect the amount demanded
Surplus
price should decrease over time
Shortage
price should increase over time
Governments use tax revenue from individuals and businesses to provide______.
public goods and services
When inflation is high the _______________of the dollar decreases
purchasing power
This part of the market determines SUPPLY
sellers
When quantity demanded exceeds quantity supplied at a certain cost
shortage
When quantity supplied exceeds quantity demanded at a certain price.
surplus
Productivity
the amount of a good or service that can be produced in a given amount of time
demand
the amount of a good or service that consumers want to buy
Diminishing returns
the idea that at some point each new unit becomes more expensive to produce to the point where there is no longer a profit from producing more
An decrease in demand for iPhones in Hong Kong could be caused by a(n)
the price of iPhone apps increased
What is economics?
the study of how people and countries make decisions with limited resources
Resources are usually shared. Many use bartering to exchange goods and services.
traditional
Scarcity
unlimited wants and needs/limited resources