Elasticity of supply and demand is MOSTLY related to

changes in prices and quantities of goods

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

the interaction of buyers and sellers.

Which of these is 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.

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

monopolistic competition, oligopoly

The law of demand states that

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

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

Usually a market clearing price is determined.

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

The demand curve shifts to the right.

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.

The primary of role of money in the economy is to

serve as a medium of exchange for goods and services.

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

it has few substitutes & is necessary for mosttransportation

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

They control over 75% of the market

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

rent, wages, interest, and profit

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

incorrect; she means quantity demanded decreases.

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 explains why a supply line is upward sloping?

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

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.

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

A shareholder is part owner of that business.

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

They control over 75% of the market

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

how much consumers will purchase at different prices

Which statement describes the law of demand?

As prices rise, quantity demanded decreases.

Measured by price elasticity of demand

how the price changes the quantity demanded of that product

Elasticity of supply and demand is MOSTLY related to

changes in prices and quantities of goods

Which statement is true about the circular flow diagram?

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

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Questions 45

Answers

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

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