What happens when demand increases and supply decreases?

P increases and Q can't be determined

What happens to the price of manual cars as firms supply fewer of them? Why?

Price increases, the law of demand

The market price for which Qs=QD results from _________?

Demand and supply intersecting on the graph., The Market being at Equilibrium

Normal Goods are substituted with ______ when consumers_______.

Inferior Goods, Have less income

If a company has a product with an inelastic price elasticity of supply what does that mean?

It is difficult to change the quantity supplied

What makes demand Downward sloping

Law of demand, income effect, and diminishing marginal util

The_______ shape of total utility curve shows that _____ is ______?

Concave down, Marginal Util, decreasing

What is the effect of a price ceiling on consumer and producer surplus?

Increases consumer surplus and decreases producer surplus

What is the difference between a tariff and a quota?

A tariff is a tax while a quota is a limit on quantity

The price of minute rice increases to $4. The demand for $3 rice will _____ because _____.

Increase, Substitution & Income Effect.

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AP MICRO ECONOMICS UNIT 2 MEGA REVIEW

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Questions 18

Answers

1
When there is a Shortage in the market what is something the government could do to help?
Make them produce at fair return
Tax the product
Subsidize the product
Tell them to make more
2
If the % change in Q of A is 5% and the % change in P of B is -4% then the two products are...
Elastic
Substitutes
Inelastic
Complements
3
What happens when demand increases and supply decreases?
P decreases and Q can't be determined
P increases and Q decreases
P increases and Q stays the same
P increases and Q can't be determined
4
Where is a price floor placed?
At equilibrium
Above equilibrium
On the x-axis
Below equilibrium
5
What happens to the price of manual cars as firms supply fewer of them? Why?
Price increases, the law of supply
Stays the same, inferior good
Price decreases, the substitution effect
Price increases, the law of demand
6
How much is this excise tax worth?
$4
$2
$3
$1
7
The market price for which Qs=QD results from _________?
Revenue maximization
Demand and supply intersecting on the graph.
The firm got lucky
The Market being at Equilibrium
8
Normal Goods are substituted with ______ when consumers_______.
Inferior Goods, Have changes in taste
Public Goods, Have to Pay Excise Tax
Inferior Goods, Have less income
Elastic Goods, Have increase in disposable income
9
If a company has a product with an inelastic price elasticity of supply what does that mean?
They can easily change the quantity supplied
It is difficult to change the quantity supplied
The quantity demanded does not change very much
The quantity demanded for their product changes drastically
10
What makes demand Downward sloping
Only Income effect and diminishing marginal utility
Substitution effect and E=mc^2
Only law of demand
Law of demand, income effect, and diminishing marginal util
11
What increases with competition if free trade is allowed?
Demand
Supply
Nothing
Innovation
12
The_______ shape of total utility curve shows that _____ is ______?
Concave down, demand, constant
Concave up, Marginal Util, Increasing
Concave down, Marginal Util, decreasing
Concave up, Marginal Cost, Increasing
13
What is the effect of a price ceiling on consumer and producer surplus?
Increases CS and has no effect on producer surplus
Decreases CS and has no effect on producer surplus
Decreases consumer surplus and increases producer surplus
Increases consumer surplus and decreases producer surplus
14
What is the difference between a tariff and a quota?
A tariff is a tax while a quota is a limit on quantity
There is no difference
Tariffs are only for exports and quotas are only for imports
A tariff is a limit on quantity and a quota is a tax
15
Which one of the following is not a shifter of demand?
Price of related goods and services
Price
Number of Consumers
Expectations of the consumer
16
The price of minute rice increases to $4. The demand for $3 rice will _____ because _____.
Increase, Law of Supply
Increase, Substitution & Income Effect.
Decrease, Law of Demand
Increase, This is your brain on drugs
17
What is one benefit of free trade?
Diversification of production
Employment will increase
World prices will decrease
More monopolies will arise
18
The difference between what is willing to be paid and what they actually pay is
Profit
Producer Surplus
Consumer Surplus
Excise Tax

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