Economics- Unit 3: Microeconomics

Which is a true statement about demand?

For demand to exist, there must be a desire, willingness, and ability to pay for a product.

Read the scenario. Jill is going to buy a car. She wants to get a vehicle with a good safety record and high mileage to the gallon. She compares cars by visiting the manufacturers' websites. Which is true regarding Jill's approach?

She is likely to receive accurate information from the manufacturers because laws require them to provide it.

Read the sentence. _[blank]_ websites tend to be the most creditable and are safe information sources. Which correctly completes the sentence?

Government (.gov)

In an odd number of points in a set, how do you find the median?

The median is the number in the middle of the set.

The Federal Trade Commission (FTC) protects consumers in what ways? (Select all that apply.)

It develops rules and guidelines for maintaining healthy marketplaces. It conducts investigations that can result in lawsuits for lawbreakers.

Which is an example of the law of supply?

The price of a product decreases, resulting in a decrease supply.

When demand for a product is high, what should be done to prevent a shortage in the short term?

The price should be adjusted upwards.

What are examples of government involvement in a mixed market economy? (Select all that apply.)

Requiring car companies to provide information regarding gas mileage. Requiring food companies to provide nutrition labels. Requiring drug companies provide a list of potential side effects.

Read the scenario. A company's production is slowing. Each additional variable produces more units but at a decreasing rate. This company is in which stage of production?

They are in stage two.

A single cable company that buys up all other cable companies to reduce competition and raise prices is known as what?

trust

When is a product likely to have elastic supply?

when production of a product is easy to replicate

Why do suppliers offer more for sale when prices are high?

They are motivated by profit and see an opportunity to make money.

What type of market involves the trade of raw materials such as gold, oil, and corn?

commodity market

How does a company entice the consumer to buy more using marginal analysis? (Select all that apply.)

giving away a prize with each purchase offering a buy one, get one free sale

What are the primary reasons for a market to fail? (Select all that apply.)

inadequate competition among firms inadequate information about markets among consumers and sellers resource immobility of land, capital, and labor

What is the rise in the general level of prices on goods and services over time called?

inflation

What is the correct structure of a five-paragraph essay?

introductory paragraph, three body paragraphs, and a conclusion paragraph

Read the statement. If the price of a product becomes too expensive, then the demand for it decreases. Which economics concept is this?

law of demand

Which economics concept states that price and quantity of demand have an inverse relationship?

law of demand

According to the video and economists, what are some factors in supply-side economics? (Select all that apply.)

lower income taxes price of the product

According to the law of demand, what increases the demand in the marketplace?

lower prices

What are ways a company can increase its market share? (Select all that apply.)

lower prices improve products

Read the scenario. A big-box store purchases 90 saws and charges $50 each. After one week, they have not sold any saws. What could the store do?

lower the price to see if consumers will buy any

In economics, what is the definition of margins?

the ability to identify and observe certain limits

What is marginal cost?

the cost to produce one additional unit

What does the minimum price of an item reflect?

the lowest price that will cover the costs of production

Adding a series of numbers and dividing the sum by the total number of items will supply you with what?

the mean

Read the scenario. William is looking to track sales at various stores. The price, color, and size of the item being tracked are the same at each store. Which is the dependent variable?

the store

Read the sentence. When writing a five-paragraph essay, the introductory paragraph must include a _[blank]_. Which correctly completes the sentence?

thesis statement

Why does the consumer price index (CPI) measure inflation?

to determine change in prices over time

What is demand elasticity?

xxx a measure of the usefulness of a product for consumers xxx a measure of the value of a product in the marketplace

What does the law of variable proportions say about marginal product?

xxxIt will increase if all inputs are increased slowly. xxxIt will increase if labor inputs are increased.

Which product is most likely to have elastic supply in the short run?

xxxMP3 player xxxoil

How does competition differ between a monopoly and an oligopoly?

xxxMonopolistic competition has product differentiation, while oligopolistic competition does not. xxxMonopolistic competition takes place in rural areas, but oligopolistic competition takes place in urban areas.

What is true of a perfectly competitive market?

xxxThe problem of scarcity does not exist. xxxThe market share varies by firm.

When a business wants to calculate all of the money it collects, what is it concerned with?

xxxfixed revenue xxxmarginal revenue

Read the statement. A monopoly's prices are determined by _[blank]_. Which most accurately completes the sentence?

xxxperfect competition xxxmarket equilibrium

Examine the graph illustrating Ken's bank account. In what year did Ken withdraw about $1,000 from his bank account?

year 10

What happens to demand when prices increase?

When prices go up, demand goes down.

How do you calculate the mode?

You find the data point that occurs most often.

Read the scenario. Allen lives in the mountains in the northern part of his state. He has only one option for phone and Internet service. With what type of monopoly does Allen do business?

a geographic monopoly

What would happen if the price of a product remained low even though demand for the product was very high?

a shortage

Barring prices from exceeding a certain maximum is an example of which economics concept?

price ceiling

Read the sentence. Raul has paid the same amount for his apartment for twenty years. This is an example of which economics concept?

price ceiling

Guaranteeing profit for the retailer is an example of which economics concept?

price floor

Read the scenario. All of the dry cleaners within 50 miles charge the same price for services. They meet each week to ensure every store is following along with the collusion. What is being described?

price-fixing

What is the price of widgets when the quantity demanded is 4?

$6

For the set {20,21,21,23,26,30,36,39}{20,21,21,23,26,30,36,39}, what is the mode?

21

For the set {16,17,17,19,22,26,32,35}{16,17,17,19,22,26,32,35}, what is the mean?

23

Which is an example of a shortage?

A consumer tries to buy bread, but the store is sold out.

Which most accurately describes a firm's goal regarding revenue?

A firm will continue producing until its marginal revenue equals its marginal cost.

Which accurately provides an example of demand elasticity?

As the price of video games decreases by 20 percent, the demand for video games increases by 30 percent.

Read the scenario. Car Company X manufactures automobiles. Its costs of production have recently risen because the cost of electricity needed to power the manufacturing plants have increased. Which best describes the outcome of the above scenario?

Car Company X will decrease the supply of automobiles it produces and likely will sell them at higher prices.

Lesson 14

Competitions and Market Structures

What does the law of demand state about consumer decisions?

Consumers will buy more at lower prices.

Lesson 11

Demand

Which accurately describes the difference between elastic and inelastic demand?

Elastic demand refers to a change in demand by consumers when the price of a good or service changes, whereas inelastic demand refers to the lack of change in demand as prices change.

Which accurately describes the difference between elastic and inelastic supply?

Elastic supply refers to a change in production by producers when the price of a good or service changes, whereas inelastic supply refers to the lack of change in production as prices change.

What is a difference between perfect competition and monopolistic competition?

In a perfectly competitive market, products are perfect substitutes for each other. In a monopolistic market, products are differentiated.

What consequences occur when there is insufficient competition in the marketplace? (Select all that apply.)

Inadequate competition can lead to poor allocation of scarce resources by large firms. Inadequate competition can lead to artificial shortages and higher prices. Inadequate competition can lead large firms to lobby and influence politicians.

How does an increase in the price of a substitute affect demand for a product?

It causes demand to go up because the product is less expensive than its substitute.

What is true regarding price? (Select all that apply.)

It is the value of a product in terms of money. It sends a message to consumers about the worth of a product.

How does familiarity with prices affect the market? (Select all that apply.)

It makes allocating resources more efficient. It forces businesses to respond to consumer demand.

Why might the government intervene to set prices? (Select all that apply.)

It wants to ensure that all people can afford food. It wants to ensure that the country can produce items it needs in an emergency. It wants to ensure that the government has the resources it needs.

Read the sentence. The latest holiday toy has arrived in the store. What will happen to the price as the holiday approaches?

It will increase due to more demand and less supply.

Read the sentence. A new technology is created to help a manufacturer. How will this affect production?

It will increase supply because the item can now be produced at a lower price.

What were the final agreements between Microsoft and the Department of Justice? (Select all that apply.)

Microsoft had to revise its licensing practices and grant usage rights to share its programming. Microsoft had to allow users to remove middleware products like web browsers.

What was the original ruling on the US vs. Microsoft Corporation case by Judge Jackson?

Microsoft was a monopoly and had to be split into separate hardware and software divisions.

What is the definition of the Law of Variable Proportions?

Output in the short run will change when one input is varied and others remain constant.

Read the sentence. The local power company is a natural monopoly. What does this mean for the consumer?

Prices are regulated by the government to keep costs lower.

How does an oligopoly help the consumer? (Select all that apply.)

Product prices tend to remain stable, so the consumer comes back. Companies become innovators as they seek bigger market share.

Read the scenario. Goodwheel Tire Company discovered that the material it uses in its tires cause the tire to fail at high speeds. By law, what is Goodwheel required to do?

Public disclosure laws require Goodwheel to inform consumers as soon as possible.

Lesson 12

Supply

Which correctly demonstrates the law of demand?

The Pizza Place increases the cost of a slice of pizza from $2.00 to $2.50. The number of slices sold in one day drops from 250 to 175.

Lesson 13

The Price System

Read the sentence. After four days, a company has sold only one of a new item, of which they have thirty in stock. What are its options? (Select all that apply.)

The company can lower the price and wait for sales to increase. The company can offer a discount coupon with another purchase.

How do public disclosure laws benefit consumers?

The laws require businesses to provide accurate details so that consumers can make informed decisions.

When businesses across an industry increase the price of a good, which could be true regarding market equilibrium?

The market has not reached equilibrium and a price adjustment will help prevent a shortage.

Which is the best way a consumer can measure inflation over time?

There is a general increase in prices on the majority of products and services that consumers use.

What are variable costs?

They are costs that change based on the number of units produced.

What is the relationship between price and demand?

They move in opposite directions.

What is the relationship between price and supply in the law of supply?

They move in the same direction.

What is true of geographic monopolies?

They often exist in areas where the customer base is small.

Read the scenario. Your town has four coffee shops spread out over two square miles. How do they stay competitive with each other? (Select all that apply.)

They sell different items to attract customers. They sell the same product at a lower price.

Read the scenario. A city decides that the main road through town is too busy at 5:00 p.m., when everyone leaves work. The city decides to put up a toll booth where people have to pay one dollar to use the road from 4:00 p.m. to 6:00 p.m. After six months, the city realizes that there has been no change in the number of people using the road. If the city's goal was to decrease the traffic on that road, what did they do wrong?

They sent the wrong signal to consumers by setting a price that was too low.

Which is a benefit of oligopolies?

They tend to keep prices stable.

What is the difference between marginal product and total product?

Total product is defined as the total output of a firm, whereas marginal product is defined as the change in output when a firm introduces one more unit of input.

Read the sentence. When citing sources in MLA format, you should include the _[blank]_, or web address, of your source at the end of each citation. Which correctly completes the sentence?

URL

Read the scenario. The local electronics store advertises a television at a discount price to draw in customers. When they ask for the product, it is unavailable, but a higher priced item is offered. What is being described?

bait and switch

What is a measure that demonstrates how consumers respond to changes in the price of goods and services?

demand elasticity

What is a measure that demonstrates how producers respond to changes in the prices of products and services?

elastic supply

Read the sentence. This economic concept exists whenever there is an exchange of goods and services between two entities. Which is most accurately described in the sentence?

market

Read the sentence. A store orders twenty-two items from the manufacturer and sells twenty-two items. What economic condition is this?

market equilibrium

What is a condition in which prices are stable and the quantity of the products supplied is equal to the amount of consumer demand?

market equilibrium

Read the scenario. Emilio is starting a business similar to two others in the neighborhood. His price will be similar to those already established with a regular supply chain. The economy is currently steady and customers know what to expect in the business he is opening. Which factors does Emilio need to focus on to do well? (Select all that apply.)

market share competition

The exclusive control of the supply or trade in a product or service is identified as what?

monopoly

What are the Three Stages of Production? (Select all that apply.)

negative returns diminishing returns increasing returns

A business situation in which a specific market segment is controlled by a group—typically two to ten businesses--is known as what?

oligopoly

Which business is likely to have a surplus of goods?

one that sets prices high

Read the sentence. Using someone else's work without giving credit is called _[blank]_. Which correctly completes the sentence?

plagiarism