Economics Review

1. Economics Review Chapter 4-7

2. When the government sets a maximum price that sellers may charge for a product, this is an example of what? • price ceiling • price floor • price adjustment

3. You have recently received a raise at work, which of the following factors would this change? • market size • consumer taste • income

4. The law of demand states that: • consumers will demand more at low prices and less at high prices • consumers will demand more at low prices and more at high prices • consumers will provide less at low prices and more at high prices

5. You decide to eat a candy bar, and then you decide to eat a second but it doesn’t taste as good. Which economic law are you experiencing? • substitution effect • elasticity • diminishing marginal utility

6. Why are gas and salt considered demand inelastic? • there are no substitutes • law of marginal utility • they are complementary goods

7. Which of the following is an example of a shortage? • quantity supplied is greater than quantity demanded • quantity supplied is less than quantity demanded • quantity supplied is equal to quantity demanded

8. If the price of Pepsi increases, and you purchase Kool-Aid instead, this is an example of? • consumer expectations • variable costs • substitute goods

9. If you purchase an item that is considered demand elastic, what does that mean? • quantity demanded is equal to quantity supplied • quantity demanded changes significantly as price changes • quantity demanded changes very little as price changes

10. Which of the following companies best illustrates a monopoly? • Wal-Mart • Exxon-Mobile • DeBeersDiamonds

11. The law of supply states that: • Businesses will provide more products at higher prices and fewer at lower prices • Businesses will provide fewer products at higher prices and more at lower prices • Consumers will purchase fewer products when they must buy them at higher prices

12. Economists predict that Madison County will reach a population of 90 thousand by 2015. Which demand factor would this influence? • income • market size • consumer taste

13. Having a worker work on a particular aspect of production is an example of? • specialization • increasing returns • diminishing returns

14. Which of the following is not a factor in the “Costs of Production”? • specialization • increasing returns • diminishing returns • government action

15. Which of the following statements best explains the concept of a monopoly? • There is only one seller of a product that has several substitutes • There is more than one seller of a product that has no close substitute • There is only one seller of a product that has no close substitute

16. Fixed costs occur no matter how much a company produces, which of the following would be an example of this? • cost of materials • shipping • mortgages on buildings

17. If you were to hire more workers and they cause more total output, which of the following is this an example of? • increasing returns • diminishing returns • marginal utility

18. When a sports team limits rivals from creating a team in their general area is an example of what type of monopoly? • government • technological • geographical

19. If the government does not want consumers to produce or consume a good, what can they implement to discourage usage? • IRA • subsidy • excise tax

20. If you hire too many workers and it causes your production to decrease, which of the following is this an example of? • increasing returns • diminishing returns • shipping

21. You manufacture cereal that uses raisins, unfortunately the price of raisins increases dramatically, which of the following factors will change supply? • input costs • labor productivity • producer expectation

22. The usage of robots to manufacture automobiles is an example of what? • input costs • labor productivity • technology

23. The type of clothes that you purchased three years ago are no longer popular and in demand, why is that? • market size • consumer tastes • consumer expectation

24. When the government pays for part of the cost of a good or service to encourage production and consumption, this is an example of? • IRA • subsidy • excise tax

25. When a business lowers their prices below rival businesses prices, this is an example of? • input costs • market size • competitive pricing

26. What is it called when the government pays for part of the cost of a good or service to encourage production and consumption of a good or service? • revenue • subsidy • excise

27. Which of the following scenarios would justify government rationing? • nation at war • flood in the Midwest • drought in the deep south

28. When does the market experience equilibrium? • when quantity demanded is more than quantity supplied • when quantity demanded is less than quantity supplied • when quantity demanded is equal to quantity supplied

29. Which of the following is an example of a surplus? • quantity supplied is greater than quantity demanded • quantity supplied is less than quantity demanded • quantity supplied is equal to quantity demanded

30. Who benefits the most from a surplus? • producers • suppliers • customers

31. When the government sets a price floor, what occurs? • shortage occurs because it is set below equilibrium price • shortage occurs because it is set above equilibrium price • surplus occurs because it is set above equilibrium price