stud
bud
Sign up
Log in
Home
Library
Explore
SAT
More
Duplicate of Supply, Demand and Equilibrium Review Flashcards | StudBud
Explore
/
Duplicate of Supply, Demand and Equilibrium Review
Duplicate of Supply, Demand and Equilibrium Review
32 terms
·
StudBud Administration
·
16 plays
Review for Unit 2 Test
Flashcards
32 cards
F
Practice quiz
P
Host live
L
Questions
32
Answers
1
What is the income effect on demand?
As income decreases, demand will increase out of desperation
As income increases, demand for luxury goods goes up
As income changes, demand will remain the same
As income increases, demand usually decreases due to savings
2
What is the definition of profit?
The cost to sell things when resources are low in price
Difference between the cost to make an item and its price
The reason that business owners adjust their prices
The difference between the demand and the supply of an item
3
What is price?
An arbitrary number that doesn't mean much in a market
A language that buyers and sellers use to determine value
The cost of buying or selling something that is always fair
A marketplace signal that confuses investors and buyers
4
How will an elastic supply change when price decreases significantly?
It will remain largely unchanged
It will increase at first, then level off
It will decrease, but only by a small amount
It will decrease significantly also
5
What happens under conditions of scarcity?
Demand up; supply up; price moves down
Demand down; supply down; price moves down
Demand up; supply down; equilibrium price moves up
Demand down; supply up; price moves down
6
Which of the following is true about prices?
Low prices signal to producers to make more stuff
Scarcity always causes lower prices as consumers demand more
Prices are usually more flexible than production
Prices will change in perfect relationship to demand
7
What is a price ceiling?
The highest possible price that a buyer will give a seller
The highest price a seller charges to maximize profit
The maximum price that can be charged for a good or service
The lowest price a market equilibrium can make a buyer pay
8
Why do people generally start businesses?
To make a profit
To find their purpose in life and have a good time
To launder money they need to get rid of
To sell all their stuff they have sitting around
9
What are the non-price factors affecting demand?
Relative inelasticity and wants vs. necessities
Fraction of total budget and the relative importance
Changes in attitude, income; substitution and complementary
Scarcity and abundance
10
What happens to demand for that same expensive item when no substitutes exist?
Demand will still decrease a lot because price went up
Demand will change very little or not at all; inelastic
Demand will increase; the higher price means people want it
People will change their behavior immediately and not buy it
11
What is a shortage?
When demand exceeds available supply
The difference between costs and sale price
When demand can't meet the outgoing supply
When business targets haven't been met for a period of time
12
What does the Law of Supply state?
As price increases supply will increase, and vice versa
As price increases, demand will decrease so supply changes
As supply is increased, the price sellers get is increased
As supply moves, demand moves with it because of prices
13
Elasticity is a measure of what?
How the supply changes when the demand changes
How stretchy the dough in Wilson's pizza shop is
How the market responds to incentives like taxes and tariffs
How much demand changes when price does, and vice versa
14
A lower price will generally do what two things?
Increase demand and increase supply
Decrease demand and increase supply
Decrease demand and decrease supply
Increase demand and decrease supply
15
What happens to prices of a good or service during a surplus?
They will fall, sometimes dramatically
They will rise to meet the excess supply
They will
They will typically remain the same
16
What is Wilson's favorite food item?
Pizza
Pizza
Pizza
Pizza
17
How does a boycott affect price of an item or service, and why?
Price will go down, because a boycott is a decreased supply
Price will go down, because a boycott is just lower demand
Price will go up, because the good will become hard to find
A boycott will increase price because of the scarcity demand
18
What is the equilibrium price?
When consumers are happy and sellers are also happy
The market has cleared; demand is exactly the same as supply
When sellers have convinced buyers they are getting a deal
When sellers have made a fair profit and buyers have a loss
19
What is the substitution effect on demand?
As substitutes become available, demand will always increase
As demand changes, substitutes will be developed
As price of a substitute goes up, demand for an item goes up
Markets without substitutes are always unbalanced
20
What do price ceilings and price floors have in common?
They both prevent markets from reaching equilibrium
They both alwyays cause demand and supply to increase
The keep marketplaces running very efficiently
They help prices to be more fair to both buyers and sellers
21
What makes supply tend to be inelastic?
If the product is priced very high or very low to begin with
If the market for a good has historically been up and down
If the suppliers are spread out across different countries
If it is hard to change production quickly
22
What advantage does the price system have over a command economy?
It allows government and producers more control over prices
It costs nothing to administer and creates incentives
It allows buyers the freedom to lose money on bad deals
It always creates fair prices for everyone
23
What is the complementary effect on demand?
Stuff that goes together will change demand differently
Demand for one item will change in step with a related item
When prices for buns shift, burgers will remain unchanged
Low prices will signal to buyers to compliment each other
24
What is a surplus?
Supply is below market value and prices are too low
When the demand is too high and supply tries to meet it
When supply is larger than demand at current prices
When demand is in disequilibrium with price due to suppliers
25
What is a demand curve?
A way to show how demand relates to price on a graph
It shows how an item will perform in competitive markets
A graph that tells what supply to expect for a given demand
A curved change in price when demand moves
26
Price of Elasticity of supply is what?
Measure used to show how responsive an amount given a G or S
Measure used to show the G. or S. provided
The price a G or S is costing you based off of Equirbrelum
27
How does a price floor work?
It is when the government raises prices by flooring it
It is a suggested bottom-end price for a good or service
It is the lowest possible price any buyer can find
It is a minimum price, which the marketplace can't go below
28
What does the Law of Demand state?
When demand changes, price will always remain the same
If price changes a lot, demand will change a lot
When price goes up, demand goes down, and vice versa
If demand moves due to non-price factors, price stays same
29
A high price generally tells producers to do what?
Make and sell more stuff
Hoard stuff so prices rise even more
Produce fewer things because prices are at disequilibrium
Make less stuff until it drops again
30
What happens to demand for an item that is getting more expensive when substitutes exist?
Demand will remain the same because of the substitutes
People will insist on the original; demand will increase
Demand will shrink because people just won't buy anything
People will buy the substitutes; demand will decrease
31
In a free market with good consumer information and many sellers, how do prices tend to move?
Generally they move down
They usually stay the same
They tend to move up
Toward equilibrium
32
When price increases dramatically for an inelastic good, what will demand do?
Demand will likely remain constant
Demand will decrease, but only by a little bit
Demand will increase with price
Demand will dramatically decrease
