A decrease in the price of a product will result in

an increase in quantity demanded of that product

In a market economy, a high price will usually cause

producers to offer more and consumers to buy less

What happens in the product market?

producers sell goods and services to consumers

What is the primary purpose of the circular flow diagram?

to show how households & businesses interact in our economy

In the market clearing price,

the supply by sellers meets the demand from buyers

Which type of transaction refers to a flow of money through the economy?

money is used to purchase goods from product market

What should happen to the equilibrium price of wooden desks when the price of wood declines?

the equilibrium price will fall

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Economics Unit 2 Review

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SSEMI 1-4

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Questions 22

Answers

1
If a product is sold & supplied at the intersection of supply & demand curves, there should be
a shortage until the price is raised
an increase in price
no shortage and no surplus
a change in the expected future price
2
A business organization where the management and ownership are separate functions
corporation
partnership
sole proprietorship
conglomerate
3
In the graph, what happened to the equilibrium price when the supply curve moved from S1 to S2?
It indicated a decrease in deman
It did not change
The equilibrium price when down
The equilibrium price went up
4
A decrease in the price of a product will result in
a decrease in demand for that product
an increase in the quantity supplied of that product
a shift in the production possibilities frontier
an increase in quantity demanded of that product
5
What happens if the price is set above the equilibrium price?
a shortage occurs
lower equilibrium price
higher equilibrium price
a surplus occurs
6
In the graph, the equilibrium price is approximately
$6
$8
$4
$10
7
In a market economy, a high price will usually cause
producers to offer less and consumers to buy less
producers to offer more and consumers to buy less
producers to offer less and consumers to buy more
producers to offer more and consumers to buy more
8
What happens in the product market?
amount of output produced by a certain input is measured
producers sell goods and services to consumers
productive resources are bought and sold
a nation's total output of goods and services increases
9
In the circular flow diagram, where do individuals sell their labor?
in the revenue market
in households
in the product market
in the factor market
10
Coach Parker is liable for ALL debts of his company.What type of business organization is this?
corporation
partnership
conglomerate
sole proprietorship
11
The point on a Supply and Demand graph where the S and D curves cross is called
equilibrium price
break even point
entrepreneurship
shortage
12
What is the primary purpose of the circular flow diagram?
to show relationship between supply and demand
to indicate the changing tastes in the product market
to show how households & businesses interact in our economy
to show the need for government intervention
13
The quantity supplied of a product will increase when the price of that product increases
Market Clearing Price
Equilibrium Price
Law of Demand
Law of Supply
14
In the market clearing price,
sellers have provided more than buyers demanded (surplus)
the demand by buyers is rapidly growing
the supply by sellers meets the demand from buyers
sellers have provided less that buyers demanded (shortage)
15
When price of a good rises, amount demanded falls, & when price falls, amount demanded rises.
Law of Demand
Equilibrium Price
Law of Supply
Market Structure
16
Where does quantity demanded equal quantity supplied? (Market clearing price/Equilibrium price)
$4
$8
$6
$2
17
Which type of transaction refers to a flow of money through the economy?
money is used to purchase goods from product market
individuals spend money to purchase resources
money is used to purchase resources in product market
businesses pay for goods purchased in product market
18
What does this line represent?
equilibrium price
production possibilities
supply
demand
19
What should happen to the equilibrium price of wooden desks when the price of wood declines?
the equilibrium price will fall
the equiibrium price will rise
the price of substitute products will rise
the equilibrium price will stay the same
20
Joe and Keily have a product they'd like to sell. What business structure do they use?
corporation
partnership
conglomerate
sole proprietorship
21
What is the most likely incentive for entrepreneurs to start a new business?
to discover a new patent
to create a new social benefit
to make a profit
to risk financial failure
22
A business organization which is owned by a single person
corporation
conglomerate
sole proprietorship
partnership

Economics Unit 2 Review Flashcards | StudBud