Unit 2 Review

1. Unit 2 Review Econ Review for EOC

2. 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. demand c. elasticity d. allocation

3. Question 1 When a consumer is able and willing to buy a good or service, he or she creates which of the following? a. consumptionb. demand c. elasticity d. allocation

4. 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.

5. 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.

6. 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.

7. 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.

8. 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.

9. 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.

10. 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.

11. 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.

12. Question 6 What kind of table lists the quantity of a good that a person will buy at different prices? a. demand schedule b. demand curve c. market demand schedule d. market demand curve

13. Question 6 What kind of table lists the quantity of a good that a person will buy at different prices? a. demand schedule b. demand curve c. market demand schedule d. market demand curve

14. 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.

15. 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.

16. Question 8 • Oreo Cookies are an example of a good that is A. Elastic. B. Inelastic. C. Unitary. D. Delicious.

17. Question 8 • Oreo Cookies are an example of a good that is A. Elastic. B. Inelastic. C. Unitary. D. Delicious.

18. 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.

19. 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.

20. How many cups of coffee will be bought if the price of coffee is $3.00? • Five. • Eight. • Twelve. • 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? • People will buy four fewer cups of coffee. • People will buy eight more cups of coffee. • People will buy twenty more cups of coffee. • People will not increase or decrease the amount of coffee they buy.

21. How many cups of coffee will be bought if the price of coffee is $3.00? • Five. • Eight. • Twelve. • 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? • People will buy four fewer cups of coffee. • People will buy eight more cups of coffee. • People will buy twenty more cups of coffee. • People will not increase or decrease the amount of coffee they buy.

22. 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? • Demand will increase, and the curve will shift to the right. • Demand will decrease, and the curve will shift to the right. • Demand will increase, and the curve will shift to the left. • Demand will decrease, and the curve will shift to the left.

23. 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? • Demand will increase, and the curve will shift to the right. • Demand will decrease, and the curve will shift to the right. • Demand will increase, and the curve will shift to the left. • Demand will decrease, and the curve will shift to the left.

24. Question 11 What does elasticity of demand measure? A. an increase in the quantity available B. a decrease in the quantity demanded C. 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

25. Question 11 What does elasticity of demand measure? A. an increase in the quantity available B. a decrease in the quantity demanded C. 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

26. Question 12 Which of the following does NOT cause a shift of an entire demand curve? A. a change in price B. a change in income C. a change in consumer expectations D. a change in the size of the population

27. Question 12 Which of the following does NOT cause a shift of an entire demand curve? A. a change in price B. a change in income C. a change in consumer expectations D. a change in the size of the population

28. Question 13 What effect does the availability of many substitute goods have on the elasticity of demand for a good? A. demand is elastic B. demand is inelastic C. demand is unitary elastic D. the availability of substitutes does not have an effect

29. Question 13 What effect does the availability of many substitute goods have on the elasticity of demand for a good? A. demand is elastic B. demand is inelastic C. demand is unitary elastic D. the availability of substitutes does not have an effect

30. Question 14 The Latin phrase meaning “all other things being constant” is ____. A. E Pluribus Unum B. vedi, vici, veni C. Peri Para D. Ceteris paribus

31. Question 14 The Latin phrase meaning “all other things being constant” is ____. A. E Pluribus Unum B. vedi, vici, veni C. Peri Para D. Ceteris paribus

32. Question 15 What term matches the following definition: Demand increases for a good as their income increases.

33. Question 15 What term matches the following definition: Demand increases for a good as their income increases. Answer: Normal Good

34. 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.

35. 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.

36. 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.

37. 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.

38. Question 18 • Which of the following is an example of government influence on supply? A. law of supply B. subsidies C. marginal costs D. market supply curve

39. Question 18 • Which of the following is an example of government influence on supply? A. law of supply B. subsidies C. marginal costs D. market supply curve

40. 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.

41. 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.

42. 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.

43. 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.

44. 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.

45. 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.

46. 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.

47. 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.

48. Question 23 • What factor has the greatest influence on the elasticity of supply? A. profit B. time C. labor D. financing

49. Question 23 • What factor has the greatest influence on the elasticity of supply? A. profit B. time C. labor D. financing

50. 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.