Unit 2 Review Econ Review for EOC. Question 1 When a consumer is able and willing to buy a good or...

Unit 2 ReviewEcon Review for EOC

Question 1

When a consumer is able and willing to buy a good or service, he or she creates which of the following?

a. consumption b. demandc. elasticity d. allocation

Question 1

When a consumer is able and willing to buy a good or service, he or she creates which of the following?

a. consumption b. demandc. elasticity d. allocation

Question 2

How is future price related to current demand?

a. If the price is expected to rise, current demand will drop.

b. If the price is expected to fall, current demand will rise.

c. If the price is expected to rise, current demand will rise.

d. Future price is not related to current demand.

Question 2

How is future price related to current demand?

a. If the price is expected to rise, current demand will drop.

b. If the price is expected to fall, current demand will rise.

c. If the price is expected to rise, current demand will rise.

d. Future price is not related to current demand.

Question 3

What does it mean when the demand for a product is inelastic?

a. People will not buy any of the product when the price goes up.

b. A price increase does not have a significant impact on buying habits.

c. Customers are sensitive to the price of the product.

d. There are very few satisfactory substitutes for the product.

Question 3

What does it mean when the demand for a product is inelastic?

a. People will not buy any of the product when the price goes up.

b. A price increase does not have a significant impact on buying habits.

c. Customers are sensitive to the price of the product.

d. There are very few satisfactory substitutes for the product.

Question 4

Which of the following accurately states the law of demand?A. As price increases, the quantity

demanded increases.B. As price decreases, the quantity

demanded increases.C. As price decreases, the quantity

demanded decreases.D. As price decreases, the quantity

consumers substitute increases.

Question 4

Which of the following accurately states the law of demand?A. As price increases, the quantity

demanded increases.B. As price decreases, the quantity

demanded increases.C. As price decreases, the quantity

demanded decreases.D. As price decreases, the quantity

consumers substitute increases.

Question 5

Which of the following describes the substitution effect?A. As the price of a good falls, people will

substitute other products.B. As the price of a good rises, people will

substitute other products.C. As demand rises, people will substitute

other products.D. As demand falls, people will substitute

other products.

Question 5

Which of the following describes the substitution effect?A. As the price of a good falls, people will

substitute other products.B. As the price of a good rises, people will

substitute other products.C. As demand rises, people will substitute

other products.D. As demand falls, people will substitute

other products.

Question 6

What kind of table lists the quantity of a good that a person will buy at different prices?

a. demand scheduleb. demand curvec. market demand scheduled. market demand curve

Question 6

What kind of table lists the quantity of a good that a person will buy at different prices?

a. demand scheduleb. demand curvec. market demand scheduled. market demand curve

Question 7

Assume that steak and potatoes are complements. As the demand for steak increases,A. the demand for potatoes will increase.B. the demand for potatoes will decrease.C. the demand for potatoes will not

change.D. the demand for potatoes will change

only slightly.

Question 7

Assume that steak and potatoes are complements. As the demand for steak increases,A. the demand for potatoes will increase.B. the demand for potatoes will decrease.C. the demand for potatoes will not

change.D. the demand for potatoes will change

only slightly.

Question 8

Oreo Cookies are an example of a good that is

A. Elastic.B. Inelastic.C. Unitary.D. Delicious.

Question 8

Oreo Cookies are an example of a good that is

A. Elastic.B. Inelastic.C. Unitary.D. Delicious.

Question 9

New Kids on the Block was a band that was popular in the 1980s, however, their popularity has declined. Which of the following would account for a decline in the demand for their music?A. A change in income.B. A change in population.C. A change in consumer expectations.D. A change in consumer tastes.

Question 9

New Kids on the Block was a band that was popular in the 1980s, however, their popularity has declined. Which of the following would account for a decline in the demand for their music?A. A change in income.B. A change in population.C. A change in consumer expectations.D. A change in consumer tastes.

•How many cups of coffee will be bought if the price of coffee is $3.00?1.Five.2.Eight.3.Twelve.4.Twenty.•The price of a cup of coffee has decreased from $3.00 to $1.00.

Based on the information in Graph 1, which of the following statements is true?

1.People will buy four fewer cups of coffee.2.People will buy eight more cups of coffee.3.People will buy twenty more cups of coffee.4.People will not increase or decrease the amount of coffee they buy.

•How many cups of coffee will be bought if the price of coffee is $3.00?1.Five.2.Eight.3.Twelve.4.Twenty.

•The price of a cup of coffee has decreased from $3.00 to $1.00. Based on the information in Graph 1, which of the following statements is true?

1.People will buy four fewer cups of coffee.2.People will buy eight more cups of coffee.3.People will buy twenty more cups of coffee.4.People will not increase or decrease the amount of coffee they buy.

Question 10•A news report on coffee has indicated that there is a link between drinking coffee and rates of cancer. What can be expected to happen to the demand for coffee?

A. Demand will increase, and the curve will shift to the right.

B. Demand will decrease, and the curve will shift to the right.

C. Demand will increase, and the curve will shift to the left.

D. Demand will decrease, and the curve will shift to the left.

Question 10•A news report on coffee has indicated that there is a link between drinking coffee and rates of cancer. What can be expected to happen to the demand for coffee?

A. Demand will increase, and the curve will shift to the right.

B. Demand will decrease, and the curve will shift to the right.

C. Demand will increase, and the curve will shift to the left.

D. Demand will decrease, and the curve will shift to the left.

Question 11

What does elasticity of demand measure?

A. an increase in the quantity availableB. a decrease in the quantity demandedC. how much buyers will cut back or

increase their demand when prices rise or fall

D. the amount of time consumers need to change their demand for a good

Question 11

What does elasticity of demand measure?

A. an increase in the quantity availableB. a decrease in the quantity demandedC. how much buyers will cut back or

increase their demand when prices rise or fall

D. the amount of time consumers need to change their demand for a good

Question 12

Which of the following does NOT cause a shift of an entire demand curve?

A. a change in priceB. a change in incomeC. a change in consumer expectationsD. a change in the size of the

population

Question 12

Which of the following does NOT cause a shift of an entire demand curve?

A. a change in priceB. a change in incomeC. a change in consumer expectationsD. a change in the size of the

population

Question 13

What effect does the availability of many substitute goods have on the elasticity of demand for a good?

A. demand is elasticB. demand is inelasticC. demand is unitary elasticD. the availability of substitutes does

not have an effect

Question 13

What effect does the availability of many substitute goods have on the elasticity of demand for a good?

A. demand is elasticB. demand is inelasticC. demand is unitary elasticD. the availability of substitutes does

not have an effect

Question 14

The Latin phrase meaning “all other things being constant” is ____.

A. E Pluribus UnumB. vedi, vici, veniC. Peri ParaD. Ceteris paribus

Question 14

The Latin phrase meaning “all other things being constant” is ____.

A. E Pluribus UnumB. vedi, vici, veniC. Peri ParaD. Ceteris paribus

Question 15

What term matches the following definition:

Demand increases for a good as their income increases.

Question 15

What term matches the following definition:

Demand increases for a good as their income increases.

Answer: Normal Good

Question 16

What is the principle of the law of supply?A. The lower the price, the larger the

quantity produced.B. The higher the price, the smaller the

quantity produced.C. The higher the price, the larger the

quantity produced.D. The lower the price, the more

manufacturers will produce the good.

Question 16

What is the principle of the law of supply?A. The lower the price, the larger the

quantity produced.B. The higher the price, the smaller the

quantity produced.C. The higher the price, the larger the

quantity produced.D. The lower the price, the more

manufacturers will produce the good.

Question 17

Which of the following is the best example of the law of supply?A. A sandwich shop increases the number of

sandwiches they supply every day when the price is increased.

B. A food producer increases the number of acres of wheat he grows to supply a milling company.

C. A catering company buys a new dishwasher to make their work easier.

D. A milling company builds a new factory to process flour to export.

Question 17

Which of the following is the best example of the law of supply?A. A sandwich shop increases the number of

sandwiches they supply every day when the price is increased.

B. A food producer increases the number of acres of wheat he grows to supply a milling company.

C. A catering company buys a new dishwasher to make their work easier.

D. A milling company builds a new factory to process flour to export.

Question 18

Which of the following is an example of government influence on supply?

A. law of supplyB. subsidiesC. marginal costsD. market supply curve

Question 18

Which of the following is an example of government influence on supply?

A. law of supplyB. subsidiesC. marginal costsD. market supply curve

Question 19

What do sellers do if they expect the price of goods they have for sale to increase dramatically in the near future?A. sell the goods now and try and reinvest the

money in the company.B. sell the goods now but try and get a higher

price for the item.C. hold on to the goods until the price rises.D. hold on to the goods regardless when the

price rises.

Question 19

What do sellers do if they expect the price of goods they have for sale to increase dramatically in the near future?A. sell the goods now and try and reinvest the

money in the company.B. sell the goods now but try and get a higher

price for the item.C. hold on to the goods until the price rises.D. hold on to the goods regardless when the

price rises.

Question 20

The price of steel decreases, which makes cars cheaper to produce. What would be the effect on supply?

A. Supply of cars will increase.B. Supply of cars will decrease.C. Supply of cars will remain the same.D. Supply of cars will not be affected.

Question 20

The price of steel decreases, which makes cars cheaper to produce. What would be the effect on supply?

A. Supply of cars will increase.B. Supply of cars will decrease.C. Supply of cars will remain the same.D. Supply of cars will not be affected.

Question 21

Glass makers have to comply with a new regulation making glass production more expensive. What can be expected to happen to supply of glass windows?A. The supply will increase.B. The supply will decrease.C. The supply will remain the same.D. The supply will be unaffected.

Question 21

Glass makers have to comply with a new regulation making glass production more expensive. What can be expected to happen to supply of glass windows?A. The supply will increase.B. The supply will decrease.C. The supply will remain the same.D. The supply will be unaffected.

Question 22

Which of these events would indicate a movement along a supply curve for batteries?A. Workers at a major battery factory go on strike

and stop production.B. A new law requires battery manufacturers to

spend more money on environmentally-sound trash disposal.

C. Battery manufacturers raise the price of eight AA batteries from $3.50 to $3.95 a set.

D. A new trade agreement enables stores to import foreign batteries.

Question 22

Which of these events would indicate a movement along a supply curve for batteries?A. Workers at a major battery factory go on strike

and stop production.B. A new law requires battery manufacturers to

spend more money on environmentally-sound trash disposal.

C. Battery manufacturers raise the price of eight AA batteries from $3.50 to $3.95 a set.

D. A new trade agreement enables stores to import foreign batteries.

Question 23

What factor has the greatest influence on the elasticity of supply?

A. profitB. timeC. laborD. financing

Question 23

What factor has the greatest influence on the elasticity of supply?

A. profitB. timeC. laborD. financing

Question 24

What is an excise tax?A. A measure of the way quantity supplied

reacts to a change in price.B. The tendency of suppliers to offer more

of a good at a higher price.C. A government payment that supports a

business or market.D. A payment to the government on the

production or sale of a good.

Question 24

What is an excise tax?A. A measure of the way quantity supplied

reacts to a change in price.B. The tendency of suppliers to offer more

of a good at a higher price.C. A government payment that supports a

business or market.D. A payment to the government on the

production or sale of a good.

Question 25

The government has eliminated a subsidy given to corn farmers. What can be expected to happen to the supply of corn?A. The supply of corn will increase.B. The supply of corn will decrease.C. The quantity supplied of corn will

increase.D. The quantity supplied of corn will

decrease.

Question 25

The government has eliminated a subsidy given to corn farmers. What can be expected to happen to the supply of corn?A. The supply of corn will increase.B. The supply of corn will decrease.C. The quantity supplied of corn will

increase.D. The quantity supplied of corn will

decrease.

Graph 1. Supply of mp3 Players.

How many mp3 players will be supplied at $30?

10.50.100.160.

The price of mp3 players has decreased from $60 to $30. Based on the information in Graph 1, which of the following statements is true?

Sellers will supply fewer mp3 players at $30.Sellers will supply more mp3 players at $30.Sellers will produce the same amount of mp3 players at $30.Sellers will leave the market entirely.

Graph 1. Supply of mp3 Players.

How many mp3 players will be supplied at $30?

10.50.100.160.

The price of mp3 players has decreased from $60 to $30. Based on the information in Graph 1, which of the following statements is true?

Sellers will supply fewer mp3 players at $30.Sellers will supply more mp3 players at $30.Sellers will produce the same amount of mp3 players at $30.Sellers will leave the market entirely.

Question 28

What happens when the price of a good with an elastic supply goes down?

A. existing producers will expand and some new producers will enter the market

B. some producers will produce less and others will drop out of the market

C. existing firms will continue their usual output but will earn less

D. new firms will enter the market as older ones drop out

Question 28

What happens when the price of a good with an elastic supply goes down?

A. existing producers will expand and some new producers will enter the market

B. some producers will produce less and others will drop out of the market

C. existing firms will continue their usual output but will earn less

D. new firms will enter the market as older ones drop out

Question 29

What effect does it have on supply?

The government has required all car manufacturers to limit the amount of pollutants exhaust puts into the atmosphere.

Question 29

The government has required all car manufacturers to limit the amount of pollutants exhaust puts into the atmosphere.

Answer: Decrease; Gov’t Regulations

Question 30

The government has given me money to plant more soybeans this year.

Question 30

The government has given me money to plant more soybeans this year.

Answer: Increase; Subsidy

Question 31

The U.S. imports his oil from Russia. Russia has recently discovered a new oil supply.

Answer: Increase; Global Influence

Question 32

Elastic or Inelastic??

The price of hand sanitizer increases.

Question 32

Elastic or Inelastic??

The price of hand sanitizer increases.

Answer: Elastic

Question 33

Elastic or Inelastic???

The price of Ben Franklin’s manuscripts increases.

Question 33

The price of Ben Franklin’s manuscripts increases.

Answer: Inelastic

Question 34

Elastic or Inelastic????

The price of a Van Gogh painting increases.

Question 34

Elastic or Inelastic????

The price of a Van Gogh painting increases.

Answer: Inelastic

Question 35

The price of electric fans increases.

Question 35

The price of electric fans increases.

Answer: Elastic

Question 36

When buyers will purchase exactly as much as sellers are willing to sell, what is the condition that has been reached?A. supply and demandB. excess demandC. equilibriumD. price floor

Question 36

When buyers will purchase exactly as much as sellers are willing to sell, what is the condition that has been reached?A. supply and demandB. excess demandC. equilibriumD. price floor

According to this graph, the amount of excess demand is

100150200250

According to this graph, the amount of excess demand is

100150200250

Question 38

Rent control used in New York City to control the price of housing is an example of a(n)

A. price floorB. price ceilingC. equilibrium priceD. surplus

Question 38

Rent control used in New York City to control the price of housing is an example of a(n)

A. price floorB. price ceilingC. equilibrium priceD. surplus

Question 39

Which of the following is an example of a shortage?A. Stores cannot sell all the new popular

toys they have on hand.B. Manufacturers make too many units of

a popular new toy.C. Consumers cannot find enough of a

popular new toy in stores.D. Consumers cannot afford to buy a new

popular toy.

Question 39

Which of the following is an example of a shortage?A. Stores cannot sell all the new popular

toys they have on hand.B. Manufacturers make too many units of

a popular new toy.C. Consumers cannot find enough of a

popular new toy in stores.D. Consumers cannot afford to buy a new

popular toy.

Question 40

What is a price floor?A. A pristine marble floor upon which to

count obscene amounts of cash.B.A maximum price that can be legally

charged for a good.C. A minimum price set by the

government that must be paid for a good.

D. A price where both supply and demand meet.

Question 40

What is a price floor?A. A pristine marble floor upon which to

count obscene amounts of cash.B.A maximum price that can be legally

charged for a good.C. A minimum price set by the

government that must be paid for a good.

D. A price where both supply and demand meet.

Question 41

On which kinds of goods do governments generally place price ceilings?

A. those that are cheap but could become more expensive without the ceiling

B. those that are not necessary but have become customary

C. those that are essential and cheap D. those that are essential but too expensive for

some consumers

Question 41

On which kinds of goods do governments generally place price ceilings?

A. those that are cheap but could become more expensive without the ceiling

B. those that are not necessary but have become customary

C. those that are essential and cheap D. those that are essential but too expensive for

some consumers

Question 42

When quantity supplied is not equal to quantity demanded the market is in

a. abundant supply b. disequilibrium c. excess availability d. excess supply

Question 42

When quantity supplied is not equal to quantity demanded the market is in

a. abundant supply b. disequilibrium c. excess availability d. excess supply

the equilibrium price.

a price ceiling.

a price floor. d.

a subsidy.

According to Figure 6.2, in this market, a price of $1.00 would be

a price ceiling.

a price floor. d.

a subsidy.

a price ceiling.

a price floor. d.

a subsidy.

a price ceiling.

a price floor. d.

a subsidy.

Question 45

What is the name of the smallest amount that can legally be paid to most workers for an hour of work?

A. equilibrium priceB. supply costC. price floorD. minimum wage

Question 45

What is the name of the smallest amount that can legally be paid to most workers for an hour of work?

A. equilibrium priceB. supply costC. price floorD. minimum wage

Question 46

A surplus will develop whenA. the quantity supplied of a good is

greater than the quantity demanded of that good.

B. the quantity demanded of a good is greater than the quantity supplied of that good.

C. the supply and demand curves meet.

D. the supply curve shifts to the right.

Question 46

A surplus will develop whenA. the quantity supplied of a good is

greater than the quantity demanded of that good.

B. the quantity demanded of a good is greater than the quantity supplied of that good.

C. the supply and demand curves meet.

D. the supply curve shifts to the right.

Question 47

How is a surplus eliminated?

A. Sellers raise the price of the good.B. Sellers lower the price of the good.C. Buyers stop buying the good.D. Buyers raise the price of the good.

Question 47

How is a surplus eliminated?

Question 48

How is a shortage eliminated?

Question 48

How is a shortage eliminated?

Question 49

Which term matches the following definition?

a market structure in which a large number of firms all produce the same product

Question 49

a market structure in which a large number of firms all produce the same product

Answer: Perfect Competition

Question 50

a product that is considered the same no matter who produces it

Question 50

a product that is considered the same no matter who produces it

Answer: Commodity

Question 51

a market dominated by a single seller

Question 51

a market dominated by a single seller

Answer: Monopoly

Question 52

a license that gives the inventor of a new product the exclusive right to sell it for a certain period of time

Question 52

a license that gives the inventor of a new product the exclusive right to sell it for a certain period of time

Answer: Patent

Question 53

any factor that makes it difficult for a new firm to become part of a market

Question 53

any factor that makes it difficult for a new firm to become part of a market

Answer: Barrier to Entry

Question 54

What is the definition of an oligopoly?

A. one firm producing 95 percent of the output

B. two to four firms producing 70 percent to 80 percent of the output

C. eight to ten firms producing 60 percent to 70 percent of the output

D. eight to ten firms producing 90 percent of the output

Question 54

What is the definition of an oligopoly?

A. one firm producing 95 percent of the output

B. two to four firms producing 70 percent to 80 percent of the output

C. eight to ten firms producing 60 percent to 70 percent of the output

D. eight to ten firms producing 90 percent of the output

Question 55

What is monopolistic competition?

A. one company selling the identical product under different names

B. one company selling several different products under different names

C. a very few companies selling identical products

D. many companies selling similar but not identical products

Question 55

What is monopolistic competition?

A. one company selling the identical product under different names

B. one company selling several different products under different names

C. a very few companies selling identical products

D. many companies selling similar but not identical products

Question 56

Which of the following is NOT a condition for perfect competition?

A. Many buyers and sellers participate in the market.

B. Sellers offer a wide variety of products. C. Buyers and sellers are well informed

about products. D. Sellers are able to enter and exit the

market freely.

Question 56

Which of the following is NOT a condition for perfect competition?

A. Many buyers and sellers participate in the market.

B. Sellers offer a wide variety of products. C. Buyers and sellers are well informed

about products. D. Sellers are able to enter and exit the

market freely.

Question 57

What was the chief effect of the Sherman Antitrust Act?

A. The federal government repealed regulations that controlled the airline and trucking industries.

B. Microsoft required personal computer manufacturers to include its web browser with the Microsoft Windows operating system.

C. John D. Rockefeller formed the Standard Oil Trust as a protected natural monopoly.

D. The federal government won the power to prevent monopolies and mergers that interfered with trade between states.

Question 57

What was the chief effect of the Sherman Antitrust Act?

A. The federal government repealed regulations that controlled the airline and trucking industries.

B. Microsoft required personal computer manufacturers to include its web browser with the Microsoft Windows operating system.

C. John D. Rockefeller formed the Standard Oil Trust as a protected natural monopoly.

D. The federal government won the power to prevent monopolies and mergers that interfered with trade between states.

Question 58

What is one kind of monopoly that the U.S. government generally permits?

A. the telephone companyB. a patent on an inventionC. low-price gasoline

D. all medications

Unit 2 Review Econ Review for EOC. Question 1 When a consumer is able and willing to buy a good or...

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