Economics Unit 2 Test

Which of the following factors contribute to market failure ?

.D . inadequate competition

Which product most likely has a demand that is inelastic ?

A vital medicine

B.) Markets can theoretically fail , but not in reality . C. Market failure is a myth . D.) Market failure is an unproven hypothesis .

A. Markets can sometimes fail .

In the economic term oligopoly the word part olig- probably means

A.) . "few"

Based on the graphs , which of the following statements about supply and demand are accurate Select all that apply

A.) A surplus occurs when the price of burritos is set at $ 9 , because fewer people want to A buy burritos at that price C.) The burrito company will be able to sell the most burritos and maximize its profits if it sets the price at $ 5 .

Which of the following statements about pure competition are accurate ? Select all that apply .

A.) Pure competition is a theoretical market structure because no markets exhibit all of the conditions necessary to create perfect competition . competition in order C.) Pure competition requires perfect knowledge by buyers and sellers of all conditions in the market so everyone knows what products are available .

Based on the graphs which of the following statements about supply and demand are accurate ? Select all that apply .

A.) about supply A surplus occurs when the price of burritos is set at $ 9 , because fewer people want to buy burritos at that price .

What is the relationship between income and demand ?

An increase in income increases demand .

on the graphs , which of the following statements about pure competition are accurate ? Select all that apply .

B. ) Under pure competition , market supply and demand set an equilibrium price of $ 15.00 . The demand curve for the individual firm is also its marginal revenue curve because the E. ) firm will receive the same dollar amount for every unit it sells . The graph shows that the individual firm should not expand production beyond 144 units F. ) because the marginal cost of production will become larger than the marginal revenue from sales .

cannot repay the loan . This woman has signed a ______________.

B. mortgage .

How do prices function as signals that help us make economic decisions ? Select all that apply

B.) producers to make High prices signal buyers to buy less of a product and producers to make more of a product . D.) Low prices signal buyers to buy more of a product and producers to make less of a product .

Under perfect competition , what sets the equilibrium price in the market ?

B.) supply and demand

When a factory pollutes a river , the resulting water pollution is an example of a

C. negative externality

Which is an example of a public good ?

C. the army

How would an economist characterize a local government increasing property taxes to improve the school system ?

D. subsidizing a positive externality

Pure competition and monopoly

D.) are opposites

Which of these best describes the influence of high prices on the behavior of producers ?

High prices are an incentive for producers to produce more .

On a demand curve , movement along the curve , as opposed to a shift in the entire curve , is a result of

a change in price .

Which of these tends to force the price of an item upward ?

a shortage of that item

Which of these tends to force the price of an item downward ?

a surplus of that item

Which of these names the way in which producers regard taxes ?

as part of the cost of production

A plant in a small town closes , leaving hundreds of people similar plant in another state , but many of the unemployed workers are unwilling to move or cannot affe unemployed . There are jobs available at a to move An economist might use this example to______________

define resource immobility

A hungry man is willing to pay a high price for food . After he is no longer hungry , he is not willing the same high price . Which of the following best defines this example ?

diminishing marginal utility

Which would an economist consider a likely complement for coffee ?

donuts

Without prices , the three basic questions of WHAT HOW , and FOR WHOM to produce are answered by

government

Changes in quantity demanded and changes in price have a ( n )

inverse

Which of these would an item's producer be most likely to do if total revenue on that item began to decrease

produce less of that item

What are the characteristics of demand ?

the desire, ability, and willingness to buy a product

Which of these do producers of an item hope to achieve when adopting new technologies?

the supply curve for that item to the right

What test do economists use to measure elasticity ?

total expenditures .