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Economics Chapter 2 Supply & Demand Flashcards | StudBud
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Economics Chapter 2 Supply & Demand
Economics Chapter 2 Supply & Demand
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Answers
1
What is the basic law of demand
everyone has a limited income that they will spend
when price is lower, people will buy more
services are of interest in the same way goods are
higher the price, more people will want the good
2
When buyers will purchase exactly as much as sellers are willing to sell is called?
supply & demand
price floor
excess demand
equilibrium
3
Which of the following would be most likely to cause the dem. curve to shift to the right
competing pizza place goes out of business
pizza shop hires more employees
price of 2 liter of Coke goes up
pizza shop purchases a new oven
4
When prices rise, which of the following happens to income?
it goes down
it rises to meet prices
it buys less
it buys more
5
When a consumer is able and willing to buy a good or service, he/she creates...
demand
allocation
consumtion
elasticity
6
What does elasticity of demand measure
decrease in the quant. demanded
amount of time consumers need to change their demand
increase in quantity available
how buyers will cut back or increase demand based on price
7
How does substitution effect work when price drops
item becomes less popular as price drops
consumers buy item as sub for other things
subs for item also drop
consumers buy item even if they dont want it
8
Shift in demand curve means what?
change in demand at every price
decrease in both price and quantity demanded
change in consumer income
rise in price
9
What does it mean when the demand is inelastic
people will not buy product when price goes up
price increase does not have significant impact
there are few satisfactory subs for the product
customers are sensititve to the price
10
What do sellers do with their goods if they expect prices to rise by a lot in the future
sell now and invest money they make
sell goods now but charge more
store goods until price rises
store goods forever regardless if price rises
11
how does a manufacturer set his or her total output to maximize profit
determine the point where profit equals marginal revenue
determine where marg. revenue equals total cost
determine were marginal revenue equals market price
determine where marginal revenue equals marginal cost
12
What are inferior goods
goods which have lots of substitues
goods that demand falls when income rises
goods that are not well produced
goods that demand falls when price rises
13
Which of the following goods can be considered substitute goods
skis & ski boots
cars & gas
video games & video game systems
pens & pencils
14
If prices rise and income stays the same, what is effect on demand?
more goods are bought
quantity demanded remains the same
more is bought of some goods and less of others
fewer goods are bought
15
when do diminishing returns occur
when additional workers incr. total output at decr. rate
when additional workers will get in each other's way
when some workers increase output but others decrease it
when firm begins to reap benefits of specialization
16
which of the following is a good that might not be bought when prices rise?
inferior
complement
substitute
luxury
17
What determines how a change in price will affect total revenue for a company
company's pricing policy
consumer's income
elasticity of demand
level of technology
18
the additional income from selling one more unit of a good
marginal product of labor
marginal cost
increasing marginal returns
marginal revenue
19
When any effort by gov't causes supply to rise, what happens to the supply curve?
curve not affected
shifts left
shifts right
reverses direction
20
A cost that is the same at all production levels is called...
Variable Cost
Fixed Cost
Total Cost
Total Revenue
21
shoe sell out with 75% sale, sale ends & supp. is replenished but none are bought, what is this
income effect
law of diminishing returns
law of discounts
elasticity
22
How is the total cost of a factory or other production site determined
total cost = marginal cost
marginal cost + fixed cost
fixed cost + variable cost
marginal cost + variable cost
23
Which of the following is a fixed price for a store?
adverstising
short-term workers
rent
inventory
24
The cost of producing one more good is called?
marginal product of labor
marginal cost
diminishing marginal returns
marginal revenue
25
When selling price of a good goes up, what is the relationship to the quant. supplied
cost of prod. goes down
profit made on each item goes down
becomes practice to produce more goods
there is no relationship
26
Which of the following is an example of lower prod. costs brought on by new technology
delivery of gas to Chinese markets meeting demand
use of email to replace traditional mail
making pastries in local shop rather than factories
importing fresh veg. from S. America rather than canned veg.
27
How is expected future price related to current demand
not related
iif price rises, demand will drop
if price falls, demand will rise
if price rises, demand will rise
28
Why would a smaller company experience diminishing marginal product of labor earlier than large
small comp. benefits from economies of scale
smaller comp. usually pays higher operating costs
small comp. cannot afford to pay its workers as much
small comp. reaches limits of its prod. facility earlier
29
What effect does the availability of many good subs have on elasticity of demanded for a good
demand is not affected
demand is unit elastic
demand is inelastic
demand is elastic
30
What is a company's total revenue
amount of goods company can expect to sell
amount of profit a company can expect to make
price of a company's goods
amount a company receives for selling its good
