The Law of Supply states that

as prices decrease, quantity supplied decreases

In the market here, a govt-mandated price of $5 would cause which situation and consequence?

price floor with a surplus of 40 widgets

How are equilibrium price and quantity determined in most markets in the U.S. Economy?

consumer and producer interaction

On the graph here, what will happen over time if Widgets are initially priced at $5?

Market forces will push the price towards $3.

Which BEST explains the shift seen in the market graph here?

cheaper resource prices for drink producers

When the income in households increases, what is the likely result?

The demand curve shifts to the right

Which describes what has happened in the graph?

An increase in demand has caused a dec. in equilibrium price

What occurs to equilibrium price & quantity demand increases, but supply remains the same?

price increases, quantity increases

A production possibilities curve shows

combination of goods produced with resources given

In the picture below, a price of .40 represents which situation?

A surplus because the price is above equilibrium.

Jim says “as the price of something increases, the quantity demanded decreases.” Jim is ...

correct, that is the law of demand

Which would cause a production possibilities curve to shift to the left?

A massive disease that wipes out 1/2 of the population.

Which would cause the supply of wheat to shift to the right?

A new, faster wheat harvesting machine.

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Econ Midterm Graphing Review

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A review of the graphs for a basic high school economics class.

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Questions 20

Answers

1
The Law of Supply states that
as prices decrease, demand decreases
as prices increase, quantity demanded decreases
as prices increase, supply increases
as prices decrease, quantity supplied decreases
2
In the market here, a govt-mandated price of $5 would cause which situation and consequence?
price ceiling with a shortage of 40 widgets
price ceiling with a surplus of 20 widgets
price floor with a surplus of 40 widgets
price floor with a shortage of 20 widgets
3
If the price of an item increases, demand for its substitutes
increases
no way to know
decreases
is unaffected
4
A price floor is problematic in a market because it leads to
increased taxes
surpluses
decreased productivity
shortages
5
How are equilibrium price and quantity determined in most markets in the U.S. Economy?
consumer and producer interaction
government sets the price
by a point on a production possibilities curve
by the law of demand
6
On the graph here, what will happen over time if Widgets are initially priced at $5?
Market forces will push the price towards $3.
Competition will drive the price of widgets higher.
Supply will decrease because fewer people will buy widgets.
Demand will increase to meet the equilibrium quantity of 120
7
Which BEST explains the shift seen in the market graph here?
decreased preference for energy drinks
increased government taxes on drink producers
bankruptcies by several drink producers
cheaper resource prices for drink producers
8
When the income in households increases, what is the likely result?
The supply curve will shift to the left.
The supply curve becomes vertical.
The demand curve shifts to the right
The demand curve shifts to the left.
9
Which describes what has happened in the graph?
The increase in supply caused an inc in equilibrium quantity
An increase in demand has caused a dec. in equilibrium price
Supply has decreased, causing an inc in equilibrium price
Demand has increased, causing an inc in equilibrium quantity
10
Minimum wage causes what type of disequilibrium situation to exist?
price ceiling, shortage of labor
price ceiling, surplus of labor
price floor, surplus of labor
price floor, shortage of labor
11
Which of the following would NOT shift the demand curve?
price of substitute goods
popularity of the product
government regulations
income
12
Moving from point X to point Z would be an opportunity cost of
20 gallons of milk
10 gallons of milk
3 pounds of cheese
7 pounds of cheese
13
What occurs to equilibrium price & quantity demand increases, but supply remains the same?
price is unknown, quantity increases
price increases, quantity decreases
price decreases, quantity increases
price increases, quantity increases
14
A production possibilities curve shows
all of society’s resources
the technological changes that improve production
combination of goods produced with resources given
choices a person makes between items
15
In the picture below, a price of .40 represents which situation?
A shortage because the price is below equilibrium.
A surplus because the price is below equilibrium
A surplus because the price is above equilibrium.
A shortage because the price is above equilibrium
16
In the graph seen here, equilibrium is represented by which combination of price and quantity?
price of $3, quantity of 100
price of $3, quantity of 80
price of $5, quantity of 120
price of $5, quantity of 80
17
Jim says “as the price of something increases, the quantity demanded decreases.” Jim is ...
incorrect, he means demand instead of quantity demanded
correct, that is the law of demand
correct, that is the law of supply
incorrect, he means supply instead of quantity demanded
18
Which would cause a production possibilities curve to shift to the left?
Giving up some of one good to produce another.
A huge population boom in a country.
A discovery of new resources.
A massive disease that wipes out 1/2 of the population.
19
Which of the following would not shift the supply curve?
cost of inputs
improvements in technology
population
number of sellers
20
Which would cause the supply of wheat to shift to the right?
A new, faster wheat harvesting machine.
An increase in household incomes.
Wheat producing companies leaving the market.
A decrease in producer subsidies

Econ Midterm Graphing Review Flashcards | StudBud