Which factor most directly affects a furniture company's supply?

the availability of raw materials and natural resources

According to the law of supply, price and quantity move

along a track in the same direction.

Which best describes how the government sanctions technological monopolies?

by issuing a patent for the technology

Goods that are considered to be needs tend to be

inelastic when the price changes.

What is the best definition of marginal benefit?

the possible income from producing an additional item

According to the law of demand, price and quantity move

along a track in opposite directions.

Which best describes how the government enables government monopolies to exist?

by creating and running a monopoly

Which is an example of a negative incentive for producers?

a sharp increase in production costs

To generate higher profits, producers must work to

decrease their production costs.

Which statement best explains the law of supply?

Quantity supplied increases as prices rise and decreases as prices fall.

Which is an example of a positive incentive for consumers?

a coupon clipped from a newspaper

In economics, if a good is inelastic,

its supply or demand is not sensitive to price changes.

How do lower prices tend to affect demand?

They tend to increase the interest in a product.

What is the best definition of marginal cost?

the price of producing one additional unit of a good

Which statement best explains how elasticity and incentives work together?

An elastic good, such as a game, is more likely to respond to incentives.

Natural monopolies occur when one producer

can meet the market’s entire demand.

What is the best definition of marginal revenue?

the additional income gained from selling an additional good

Which statement best describes incentives?

Incentives can be positive or negative.

A market supply schedule shows

the prices and quantity in an entire market.

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Dr. Flo Micro Review

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Questions 30

Answers

1
Profit equals the total amount of money made minus
supply
prices
expenses
revenue
2
A reward or punishment that encourages people to behave in a certain way is called a(n)
incentive.
price ceiling.
equilibrium price.
want
3
Which factor most directly affects a furniture company's supply?
the availability of raw materials and natural resources
a change in the price of rugs and other complementary goods
an increased interest in antique furniture over modern furniture
the growing number of furniture buyers in the market
4
According to the law of supply, price and quantity move
from different points toward one another.
from the same point away from one another.
along a track in opposite directions.
along a track in the same direction.
5
Which best describes how the government sanctions technological monopolies?
by creating the technology itself
by authorizing one producer
by prohibiting others from entering the market
by issuing a patent for the technology
6
Which is an example of a government monopoly in the United States?
the Internal Revenue Service (IRS)
the National Park Service
the US Postal Service
the US Environmental Protection Agency (EPA)
7
Goods that are considered to be needs tend to be
elastic when the price changes.
elastic when the supply changes.
inelastic when the supply changes.
inelastic when the price changes.
8
What is the best definition of marginal benefit?
the financial gain from business activity minus expenses
the possible income from producing an additional item
the additional income gained from selling an additional good
the price of producing one additional unit of a good
9
According to the law of demand, price and quantity move
from different points toward one another.
from the same point away from one another.
along a track in opposite directions.
along a track in the same direction.
10
Which best describes how the government enables government monopolies to exist?
by owning the means of production
by allowing natural monopolies to exist
by creating and running a monopoly
by issuing a patent
11
Which is an example of a negative incentive for producers?
a chance to make more money
a sharp increase in production costs
a coupon clipped from a newspaper
a special sale at a department store
12
Which is an example of a product that is considered a need?
sports equipment
music player
breakfast food
video game
13
In the market, actions known as incentives affect
producers only.
neither consumers nor producers.
consumers only.
consumers or producers.
14
To generate higher profits, producers must work to
decrease their customer base.
increase their total supply.
decrease their production costs.
increase their total expenses.
15
A consumer might respond to a negative incentive because it could be a chance to
purchase a very popular item.
avoid additional charges.
take advantage of a sale.
buy a good at a cheap price.
16
Which statement best explains the law of supply?
Quantity supplied increases as prices rise and decreases as prices fall.
Quantity supplied decreases as prices rise and increases as prices fall.
17
Which is an example of a positive incentive for consumers?
a coupon clipped from a newspaper
a sales tax imposed by a state
an increase in price for a popular product
a steady rise in profits over a year
18
In economics, if a good is inelastic,
consumers have lost an interest in purchasing it.
its supply or demand is not sensitive to price changes.
its supply or demand is too sensitive to price changes.
producers have lost an interest in manufacturing it.
19
The point of maximum profit is the point at which the marginal cost equals the
production cost.
market price.
total revenue.
marginal revenue.
20
How do lower prices tend to affect demand?
They tend to decrease the availability of a product.
They tend to decrease the interest in a product.
They tend to increase the interest in a product.
They tend to increase the availability of a product.
21
What is the best definition of marginal cost?
the financial gain from business activity minus expenses
the additional income gained from selling an additional good
the price of producing one additional unit of a good
the possible income from producing an additional item
22
Which statement best explains how elasticity and incentives work together?
An elastic good, such as a game, is less likely to respond to incentives.
An elastic good, such as a game, is more likely to respond to incentives.
An inelastic good, such as a game, is less likely to respond to incentives.
An inelastic good, such as a game, is more likely to respond to incentives.
23
Which best describes the availability of substitutes in a monopoly?
Products have different features.
There are no substitutes.
There are different brands.
Price points vary.
24
To calculate marginal cost, producers must compare the difference in the cost of producing one unit to the cost of
distributing that unit.
purchasing a unit.
producing the next unit.
producing a different unit.
25
Natural monopolies occur when one producer
can meet the market’s entire demand.
is the only one authorized to produce a given product.
creates unique products.
controls the method of production.
26
The amount of goods and services consumers want is called the
demand.
count.
supply.
number.
27
What is the best definition of marginal revenue?
the additional income gained from selling an additional good
the financial gain from business activity minus expenses
the price of producing one additional unit of a good
the possible income from producing an additional item
28
The total amount of a product available in a market at a given price is called the
number.
supply.
count
demand.
29
Which statement best describes incentives?
Incentives are neither positive nor negative.
Incentives are mostly positive.
Incentives are mostly negative.
Incentives can be positive or negative.
30
A market supply schedule shows
the products of two companies only.
the prices and quantity in an entire market.
how prices affect a single producer.
how prices affect a group of consumers.

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