Demand for gasoline is said to be fairly inelastic for many people. This is probably because

it has few substitutes & is necessary for mosttransportation

Which explains why a supply line is upward sloping?

Law of Supply: there is a direct relationship between price & quantity

Assume Company 1 and Company 2 operate as an oligopoly. Which statement BEST represents this?

They control over 75% of the market

When the income in households increases, what is the likely result?

The demand curve shifts to the right

As the price of a good rises in a market, it acts as a signal:

to producers that they should supply a greater quantity of the good.

Assume Company 1 and Company 2 operate as an oligopoly. Which statement BEST represents this?

They control over 75% of the market

Demand for gasoline is said to be fairly inelastic for many people. This is probably because

it has few substitutes and is necessary for most transportation.

Which statement is true about the circular flow diagram?

Households: demanders in product market & suppliers in the factor market

Measured by price elasticity of demand

how the price changes the quantity demanded of that product

The primary of role of money in the economy is to

serve as a medium of exchange for goods and services.

The law of demand states that

consumers demand a larger quantity of a good when price is low.

Which of the following is true about a shareholder in a corporation?

A shareholder is part owner of that business.

Which of the following is an attempt by a firm to increase the demand for its product?

an advertising strategy designed to change consumer tastes and preferences

When economists measure the responsiveness of consumers to changes in price, they are measuring:

the price elasticity of demand.

Which statement describes the law of demand?

As prices rise, quantity demanded decreases.

The primary of role of money in the economy is to

serve as a medium of exchange for goods and services.

Which of these is measured by price elasticity of demand?

how the price changes the quantity demanded of that product

Whenever a company develops a new product, an equilibrium price and quantity will eventually be determined by

the interaction of buyers and sellers.

Interdependence and price leadership are characteristics of firms in what kind of market structure

monopolistic competition, oligopoly

Elasticity of supply and demand is MOSTLY related to

changes in prices and quantities of goods

The payments for land, labor, capital, and entrepreneurial ability respectively are

rent, wages, interest, and profit

When the income in households increases, what is the likely result?

The demand curve shifts to the right.

When economists refer to “demand,” they mean which of the following

how much consumers will purchase at different prices

When buyers and sellers interact in a market, what is the result?

Usually a market clearing price is determined.

A particular store notices a lot of merchandise piling up on the shelves and in the stock room, what can they do?

Lower prices as an incentive to purchase more.

Elasticity of supply and demand is MOSTLY related to

changes in prices and quantities of goods

Mila says “as price increases, demand decreases.” Mila is

incorrect; she means quantity demanded decreases.

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Microeconomics

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Questions 45

Answers

1
True about a shareholder in a corporation
is liable for any debts accumulated by that corporation
part owner of that business.
may not share in the earnings of that corporation
may not transfer his share to another party w/o permission
2
Demand for gasoline is said to be fairly inelastic for many people. This is probably because
it has many substitutes and is easily attained.
it is difficult to make cheaply.
it has few substitutes and is in large supply.
it has few substitutes & is necessary for mosttransportation
3
Which explains why a supply line is upward sloping?
Law of Demand: there is an indirect relationship between price and quantity
Law of Supply compares marginal costs & marginal benefits in constant rate
Law of Demand shows a positive relationship of two goods,creating the slope
Law of Supply: there is a direct relationship between price & quantity
4
Assume Company 1 and Company 2 operate as an oligopoly. Which statement BEST represents this?
They are major corporations with stockholders
They control over 75% of the market
They have products that are different, but are marketed the same way
They own many different "brands"
5
Which provides the greatest incentive for entrepreneurs to take risks?
profits
prices
inflation
interest
6
A key advantage of a partnership is
specialization of the partners
limited liability of the partners
unlimited liability of the partners
ease of raising capital through stockholders
7
If the price of an item increases, demand for its substitutes
is unaffected
decreases
increases
there is no way to tell
8
When the income in households increases, what is the likely result?
The demand curve shifts to the right
The supply curve will shift to the left.
The demand curve shifts to the left.
The supply curve becomes vertical.
9
As the price of a good rises in a market, it acts as a signal:
to consumer that they should increase their demand for the good.
to consumers that they should buy a greater quantity of the good.
to producers that they should increase their supply of the good.
to producers that they should supply a greater quantity of the good.
10
A market structure in which there is only one seller is known as a
Monopoly
Monopolistic Competition
Oligopoly
Pure Competition
11
If the price of an item increases, demand for its substitutes
increases
is unaffected
decreases
there is no way to tell
12
Assume Company 1 and Company 2 operate as an oligopoly. Which statement BEST represents this?
They are major corporations with stockholders
They control over 75% of the market
They own many different "brands"
Have products that are different, yet marketed the same way
13
Demand for gasoline is said to be fairly inelastic for many people. This is probably because
it is difficult to make cheaply.
it has few substitutes and is in large supply.
it has many substitutes and is easily attained.
it has few substitutes and is necessary for most transportation.
14
Which statement is true about the circular flow diagram?
Households: demanders in factor market & suppliers in the product market.
Businesses and households are not components of the circular flow diagram.
Business: demanders in the product market & suppliers in the factor market.
Households: demanders in product market & suppliers in the factor market
15
Measured by price elasticity of demand
how supply cycle of a product affects the price of a product
difference b/w price demanded and the sales tax on a product
how the price changes the quantity demanded of that product
effect of raising the prices on reducing quantity supplied
16
The primary of role of money in the economy is to
identify prices in various markets.
help set interest rates at financialinstitutions.
serve as a medium of exchange for goods and services.
provide a mechanism to assist foreign trade.
17
The law of demand states that
consumer demand increases when price is low.
sellers supply a larger quantity of a good when price is high.
consumers demand a larger quantity of a good when price is low.
sellers increase supply when price is high.
18
Interdependence and price leadership are characteristics of firms in what kind of market structure
monopolistic competition
monopoly
perfect competition
oligopoly
19
Which of the following is true about a shareholder in a corporation?
A shareholder may not share in the earnings of that corporation.
Shareholder may not transfer his share to another party without permission.
A shareholder is part owner of that business.
A shareholder is liable for any debts accumulated by that corporation.
20
Which of the following is an attempt by a firm to increase the demand for its product?
a production strategy to flood the market with the good or service
the imposition of a price ceiling on the product
a marketing strategy to make the good scarce and therefore more expensive
an advertising strategy designed to change consumer tastes and preferences
21
When economists measure the responsiveness of consumers to changes in price, they are measuring:
the price elasticity of demand.
income elasticity.
the percentage change in price
the price elasticity of supply.
22
Which statement describes the law of demand?
As prices fall, quantity demanded decreases.
As prices rise, quantity demanded decreases.
As prices fall, demand decreases.
As prices rise, demand decreases.
23
The primary of role of money in the economy is to
identify prices in various markets.
provide a mechanism to assist foreign trade.
help set interest rates at financial institutions.
serve as a medium of exchange for goods and services.
24
Which of these is measured by price elasticity of demand?
how the supply cycle of a product affects the price of a product
effect of raising the prices of products on reducing the quantity supplied
how the price changes the quantity demanded of that product
the difference between price demanded and the sales tax on a product
25
Name the Disadvantage: Sharon opened a dry-cleaning business. She borrowed some money from her sister and the bank.
ease of organizing the firm
unlimited liability
no separation of ownership and control
double taxation
26
Whenever a company develops a new product, an equilibrium price and quantity will eventually be determined by
the government in their role as price setter.
the interaction of sellers and producers.
how much money is available in the economy.
the interaction of buyers and sellers.
27
Which form of business organization is easiest to organize but is LEAST able to benefit from specialization
partnership
sole proprietorship
limited partnership
corporation
28
Interdependence and price leadership are characteristics of firms in what kind of market structure
monopolistic competition
perfect competition
monopoly
oligopoly
29
Elasticity of supply and demand is MOSTLY related to
changes in prices and quantities of goods
opportunity costs
appreciation and depreciation of currencies
effects of monetary and fiscal policies
30
The payments for land, labor, capital, and entrepreneurial ability respectively are
profits, wages, interest, and rent
rent, wages, interest, and profit
rent, profit, wages, and interest
wages, rent, profit, and interest
31
Name the type of market structure"In the U.S. economy, a few firms dominate the wireless telephone provider industry.
pure competition
oligopoly
monopolistic competition
monopoly
32
When the income in households increases, what is the likely result?
The demand curve shifts to the right.
The supply curve will shift to the left.
The supply curve becomes vertical.
The demand curve shifts to the left.
33
When economists refer to “demand,” they mean which of the following
how much sellers will supply at a particular price
how much people want the product if it is free
how much satisfaction buyers receive from a purchase
how much consumers will purchase at different prices
34
Firm X has developed a new mechanical device and has patented all of the key components used in its production.
technological monopoly
geographic monopoly
natural monopoly
government monopoly
35
When buyers and sellers interact in a market, what is the result?
Fewer and fewer goods are produced because buyers have all they want.
Usually a market clearing price is determined.
markets become unstable and unreliable.
Equilibrium quantities are determined and prices are set by the government.
36
Which form of business organization is easiest to organize but is LEAST able to benefit from specialization?
sole proprietorship
limited partnership
corporation
partnership
37
A market structure in which there is only one seller is known as a
Monopoly
Pure Competition
Oligopoly
Monopolistic Competition
38
In which market structure does a firm have greatest control over its product’s price?
perfect competition
oligopoly
monopoly
monopolistic competition
39
Which provides the greatest incentive for entrepreneurs to take risks?
interest
prices
profits
inflation
40
A particular store notices a lot of merchandise piling up on the shelves and in the stock room, what can they do?
Produce less to promote scarcity.
Raise prices to make the goods appear higher in quality.
Lower prices as an incentive to purchase more.
Begin producing different products.
41
Elasticity of supply and demand is MOSTLY related to
appreciation and depreciation of currencies
changes in prices and quantities of goods
opportunity costs
effects of monetary and fiscal policies
42
Mila says “as price increases, demand decreases.” Mila is
correct; that is the law of demand.
incorrect; she means quantity demanded decreases.
correct; that is the law of supply.
incorrect; she means demand increases.
43
Business organization is easiest to organize but is LEAST able to benefit from specialization
sole proprietorship
limited partnership
partnership
corporation
44
When the U.S. government purchases a submarine from a company, the government has made a major transaction in the
factor market
public market
product market
foreign exchange market
45
A key advantage of a partnership is
ease of raising capital through stockholders
limited liability of the partners
specialization of the partners
unlimited liability of the partners

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