Economics Unit 2 Review: The Basics

Supply requires that sellers have both the willingness and ability to produce a good.

A subsidy has the opposite effect on a supply curve as a tax.

A graph that shows the amount of a good sellers are willing and able to sell at various prices is called

The winning combination for a high salary is high supply and low demand for a job.

Market demand represents

If the change in price is equal to 50 percent and the change in quantity supplied is 25 percent, then elasticity is:

When the quantity supplied of a good exceeds the quantity demanded, what exists?

Those things for which the demand rises as income rises and falls as income falls.

Two possible solutions to traffic congestion are building more freeways and charging a toll.

If there were a shortage of nurses, we would expect

When the quantity demanded of a good is greater than the quantity that is supplied, what exists?

Something for which the demand remains unchanged as income rises or falls.

Economists, rather than consumers, determine which goods are normal or inferior.

A legal maximum price at which a good can be sold is a

On this graph, which of the following represents the supplier’s response to a decrease in the cost of production?

The prices consumers pay are determined by

Price controls

If the price of a product increases, we would expect the accompanying graph to show

In the accompanying graph, which area shows a surplus?

The demand for necessities such as milk, electricity, and water is usually

According to economists, as a person consumes more units of a good, satisfaction from each additional unit increases.

If there are few or no substitutes for a good, then which of the following is true?

In economics, demand means

Elasticity of supply is measured by looking at the relationship between

If the government taxes SUVs, the extra per-unit cost of doing business will cause producers to produce more SUVs.

The term for any place where people come together to buy and sell goods or services.

When there is a surplus in the market, which of the following is true?

Which of the following is true when there is a shortage in the market?

When a surplus occurs, producers will not be able to sell all they had hoped to sell.

A factor in determining whether or not the demand for a product is elastic is whether or not substitutes exist.

When the percentage change in quantity demanded is the same as the percentage change in price, demand is:

A vertical supply curve indicates that

A market supply curve is composed of

Which of the following could increase demand for a good?

When the percentage change in the quantity supplied is less than the percentage change in price, supply is:

A price floor results in

Which of the following products would be most inelastic?

This states that as prices increase, the quantity that buyers will purchase will decrease.

Price controls bring about less exchange than would exist without them.

An increase in _______ causes the supply curve to shift to the right as more goods are able to be produced.