Unit 2 Test Review (Supply and Demand)

Question 1

Which of the following sets the minimum price a good or service can be sold at?

Accepted Answer

Price Floor

Question 2

Which of the following best describes why the price of wheat might rise following a drought:

Accepted Answer

The supply of wheat has decreased

Question 3

When the price of butter goes UP, the demand for margarine

Accepted Answer

goes up

Question 4

Cereal and Milk are __________ products.

Accepted Answer

Complementary

Question 5

when supply decreases, the supply curve shifts to the

Accepted Answer

left

Question 6

If there is an increase in demand, what will happen to the price and quantity of the good?

Accepted Answer

Price increase and quantity increase

Question 7

Margarine and Butter are ___________ products.

Accepted Answer

Substitute

Question 8

For most products and services, increased price results in

Accepted Answer

decreased quantity demand

Question 9

If the price of lunch at school increases and the total revenue of lunches remains the same...

Accepted Answer

The elasticity of demand for school lunch is unit elastic

Question 10

An indication of how changes in price will affect changes in the amounts demanded and supplied:

Accepted Answer

Elasticity

Question 11

Which of the following would not shift the demand curve for beef?

Accepted Answer

A fall in the price of beef

Question 12

After you've had a certain amount of your favorite food, your enjoyment lessens. This shows

Accepted Answer

diminishing marginal utility

Question 13

Which of the following is true when a demand schedule is drawn on a graph?

Accepted Answer

All 3 answers are true

Question 14

What will happen to the price and quantity of chips if a new study shows chips help lose weight

Accepted Answer

Price will increase and quantity will increase

Question 15

A supply curve typically has a ____________ slope.

Accepted Answer

Positive (upward)

Question 16

What happens to the quantity supplied of goods when prices fall?

Accepted Answer

Firms supply less

Question 17

When demand decreases, the demand curve shifts to the

Accepted Answer

left

Question 18

Demand curves typically have a _____________ slope

Accepted Answer

Negative (downward)

Question 19

When people's income increases what will happen to the demand and price for shoes(normal good)

Accepted Answer

both demand and price increase

Question 20

T/F When the amount of goods supplied meets the amount demanded, this is known as equilibrium

Accepted Answer

True

Question 21

Use the graph:Suppose government set the price at $8. Which best decribes an effect of this?

Accepted Answer

There would be a surplus of 6

Question 22

A demand curve illustrates the quantity demanded at all possible prices at a given time.

Accepted Answer

True

Question 23

An increase in the price of milk shifts the demand for cereal in which direction?

Accepted Answer

To the left because milk and cereal are complements

Question 24

Which of the following sets the maximum price a good or service can be sold at?

Accepted Answer

Price Ceiling

Question 25

Considering "diminishing marginal utility", as you consume more of a good...

Accepted Answer

your additional satisfaction from each extra good decreases

Question 26

If the price of videos decreases and sales of videos also decrease, we can conclude that:

Accepted Answer

The demand for videos is inelastic

Question 27

When more goods are supplied than are demanded then a ___________ exists.

Accepted Answer

surplus

Question 28

Cars and gas are complements. As the price of gas goes up, what happens to the market for cars.

Accepted Answer

The equilibrium quantity of cars will decrease

Question 29

A downward sloping curve can be explained by:

Accepted Answer

Diminishing Marginal Utility and the Income Effect

Question 30

T/F: Minimum wage is an example of a price ceiling. Rent control is a Price floor.

Accepted Answer

False

Question 31

If bread is an inferior good, what happens to bread as consumer income increases?

Accepted Answer

Both the quantity will decrease and the price will decrease

Question 32

When less goods are supplied than are demanded in the market, a __________ exists.

Accepted Answer

shortage

Question 33

On a cold day, the price of hot cocoa is raised 50%. People still buy more than before. Why?

Accepted Answer

The demand for cocoa is inelastic

Question 34

Demand for a good is more likely to be elastic when the good is...

Accepted Answer

a luxury

Question 35

When the price of an item falls, what happens to the quantity demanded for that product?

Accepted Answer

An increase in quantity demanded

Question 36

Inelastic demand is defined as demand that is:

Accepted Answer

not affected by price changes

Question 37

The demand for salt is inelastic based on which determinant(s)?

Accepted Answer

both inexpensive and few substitutes available

Unit 2 Test Review (Supply and Demand)

Questions 37

Unit 2 Test Review (Supply and Demand)

Questions 37