In a market economy, a high price will usually cause

producers to offer more and consumers to buy less

A decrease in the price of a product will result in

an increase in quantity demanded of that product

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

money is used to purchase goods from product market

In the market clearing price,

the supply by sellers meets the demand from buyers

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

the equilibrium price will fall

What is the primary purpose of the circular flow diagram?

to show how households & businesses interact in our economy

What happens in the product market?

producers sell goods and services to consumers

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Economics Unit 2 Review

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SSEMI 1-4

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Questions 22

Answers

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

Economics Unit 2 Review Flashcards | StudBud