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Economics Topic 3 Review Flashcards | StudBud
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Economics Topic 3 Review
Economics Topic 3 Review
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1
A system of allocating scarce goods and services using criteria other than price is called
Supply shock
Price System
Rationing
Allocation
2
The ability to control prices and total market output is
Deregulation
Differentiation
Collusion
Market power
3
A situation in which quantity supplied is greater than quantity demanded is called
Surfeit
Equilibrium
Shortage
Surplus
4
The law of supply states that producers offer more of a good or service
as its price increases
There is no relationship between price and quantity supplied.
as its price decreases
as its price increases, but when producers offer less of a good or service
5
Which of the following is a fixed cost for a store?
rent
inventory
advertising
short-term workers
6
Laws that encourage competition in the marketplace are
Antitrust laws
Licensing laws
Deregulation laws
Business laws
7
A cost that changes depending on how much is produced is a
marginal cost
indirect cost
variable cost
fixed cost
8
A graphic representation of a supply schedule is a
Lorenz Curve
Demand Curve
Supply Curve
Production Possibilities Curve
9
Which of the following would likely have inelastic demand?
Electronic device
Luxury vacation
Coffee
Prescription medication
10
A government payment that supports a business or market is called a(n)
Intervention
Excise tax
Expectation
Subsidy
11
Factors that make it difficult for new firms to enter a market are
Economies of scale
Game Theory
Input costs
Barriers To Entry
12
A market dominated by a single seller is a/an
Franchise
Oligopoly
Monopolistic competition
Monopoly
13
Which is a good that consumers demand less of when their incomes increase?
Complement
Inferior Good
Substitute
Normal Good
14
Minimum wage is an example of a
Price floor
None of the above
Rationing
Price ceiling
15
A situation in which quantity demanded is greater than quantity supplied is called
Surplus
Disequilibrium
Deficiency
Shortage
16
Which of the following could cause the demand curve for cars in your city to shift to the left?
a sale at the local dealership that ends next week
a layoff of 500 workers at the city’s airport
a rise in the average wages
hundreds of new people moving into your city
17
An elastic demand is a demand that is not very sensitive to a change in price.
True
False
18
A market structure in which a large number of firms all produce the same product is
perfect competition
imperfect competition
oligopoly
monopoly
19
Which of the following is an example of a good with inelastic supply?
toothbrushes
beanbags
apples
hats
20
Which of the following does NOT affect elasticity?
Production costs
Change over time
Relative importance
Availability of substitutes
21
How would a new excise tax affect a supply curve?
None of the above
It would not shift in either direction.
It would likely shift to the right.
It would likely shift to the left.
22
How many workers should a firm hire?
The number of employees which would make marginal product of labor highest
The maximum amount of available workers
It would depend on outside factors.
There is not enough information to answer the question.
23
The desire to own something
and
the ability to pay for it is
elasticity
demand
supply
competition
24
A measure of the way quantity supplied (firms) reacts to a change in price is called
Substitution effect
Elasticity of supply
Elasticity of demand
None of the above
25
What is the effect of import restrictions on prices?
They cause prices to rise.
They cause prices to drop.
They usually do not have any lasting effect on price.
They often cause prices to rise steeply and then drop.
26
If a pizzeria owner purchases equipment enabling production of 30% more pizza then
the supply curve will shift left
the supply curve will shift right
the supply curve will shift left and then right
the supply curve will shift right and then left
27
In the event of a negative supply shock, prices will
decrease
increase
none of the above
decrease, then increase
28
Joan makes 8 smoothies/hour. She hires Jake and they can make 18 smoothies/hour. What is the marginal product of labor?
2
10
26
9
29
Which of the following allows companies to receive patents and profit from their research without competition?
Corporate monopoly
Government monopoly
Monopoly
Natural monopoly
30
Firms attempting to set prices below market for the short term to drive competitors out of business is known as
Predatory pricing
Substitution pricing
Monopoly pricing
Deregulatory pricing
31
Two goods that are bought and used together, such as pancakes and syrup, are examples of
Complements
Substitutes
Inferior Goods
Normal Goods
32
A formal organization of producers that agree to team up to coordinate prices & production to gain market power is a/an
oligopoly
cartel
imperfect competition
government monopoly
33
Will has inelastic demand for sports drinks. The price increased from $1 to $1.50. What could describe his response?
He bought 15 bottles a month at $1.00 and 20 bottles a month at $1.50.
He bought 15 bottles a month at $1.00 and 5 bottles a month at $1.50.
He bought 10 bottles a month at $1.00 and 8 bottles a month at $1.50.
He bought 10 bottles a month at $1.00 and 5 bottles a month at $1.50.
34
A measure of how consumers react to a change in price is called
Elasticity of supply
Essentialness
Efficacy of price
Elasticity of demand
35
The cost of producing one more unit of a good is called
Marginal Product of Labor
Negative Marginal Return
Marginal Cost
Marginal Benefit
36
A graphic representation of a demand schedule is a
Supply Curve
Production Possibilities Curve
Lorenz Curve
Demand Curve
37
The point at which quantity supplied and quantity demanded are the same is called
Equilibrium
Disequilibrium
Equipoise
Balance
38
Which is a good consumers demand more of when their incomes increase?
Normal good
Inferior Good
Complement
Substitute
39
Which of the following is NOT a benefit of the price system?
Prices are responsive and flexible
The price system is free to administer.
It constricts how consumers respond to price changes
Prices provide incentives
40
Which of the following is NOT a condition for perfect competition?
Many buyers and sellers participate in the market.
Sellers are able to enter and exit the market easily.
Sellers offer a wide variety of products.
Buyers and sellers are well informed about products.
41
A shift in the demand curve means which of the following?
a change in consumer income
a rise in prices
a change in demand at every price
a decrease in both price and quantity demanded
42
How much control over price do companies in a monopoly have?
very little control
no control
total control
some control
43
Many companies selling similar but not identical products is
perfect competition
oligopoly
government monopoly
monopolistic competition
44
If demand and/or supply increase the curve will shift to the right and shift to the left if there is a decrease.
True
False
45
Rationing can lead directly to a black market.
True
False
46
Rent control is an example of a
Supply shock
Price ceiling
Price floor
None of the above
47
The amount of a good or service that is available is called
Inventory
GDP
Supply
Demand
48
What kind of market runs most efficiently when one large firm supplies all of the output?
perfect competition
imperfect competition
natural monopoly
government monopoly
49
A cost which does not change, no matter how much of a good is produced is a
direct cost
variable cost
marginal cost
fixed cost
50
The effort of
each
supplier to meet the demand of as many consumers as possible is
predatory pricing
consumerism
competition
elasticity
51
The law of demand states that when a good’s price is lower
the quantity demanded is smaller
the quantity demanded is greater, but when prices are higher
There is no relationship between price and quantity demanded.
the quantity demanded is greater
52
Which of the following describes the substitution effect?
None of the above
Prices for a good increase, making demand for a substitute good increase
Price for a good decreases, making demand for a substitute good increase
Prices for a good increase, making demand for a substitute good decrease
53
A market dominated by a few large firms is a/an
Imperfect Competition
Oligopoly
Cooperative
Monopoly
54
What effects do trends have on suppliers?
Trends create decrease in demand but not profit, leading to more suppliers
Trends create an increase in demand and profit, leading to more suppliers
Trends create a decrease in demand and profit, leading to less suppliers
Trends create increase in demand but not profit, leading to less suppliers
