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Supply and Demand Test regulations equilibrium price tax surplus income effect complement price floor movement diminishing marginal utility (DMU) income effect subsidies price ceiling shortage shift demand 1. when the price is higher than the market price 2. gov't rules about how companies conduct business 3. required payment of money to the gov't to help fund gov't services 4. when you have a price floor, this usually results 5. when something other than price affects quantity supplied or demanded 6. when supply and demand meet 7. when one buys this product, one also tends to buy this as well 8. the effect that increasing or decreasing prices has on the buying power of income 9. when you have a price ceiling, this usually results 10. the effect that increasing or decreasing prices has on one’s buying power 11. payments to private businesses by the gov't 12. the usefulness or value of a product decreases with each additional purchase of it 13. when people are willing to pay for a good or service 14. when price is the only factor that affects quantity demanded or supplied 15. when the price is lower than the market price 16. List three pairs of complementary goods. 17. Write the law of demand and the law of supply. Label. 18. For each of the following scenarios, state whether supply or demand would change, the direction the curve would shift, and the reason for the shift. a. Market: candy. News event: Because of a federal sugar policy designed to protect U.S. sugar producers, the price of sugar increases. b. Market: cars. News event: Congress approves across-the-board tax cuts. c. Market: gas. News event: Hurricane Katrina wipes out 60% of offshore refineries. 19. What language do consumers and producers use to communicate? A. French C. money B. graphs D. price 20. The amount of a good or service that a consumer is willing and able to buy at various possible prices during a given time period is A. supply. C. income effect. B. demand. D. purchasing power. 21. __________ describes the usefulness of a product or the amount of satisfaction that an individual receives from consuming a product. A. Utility C. Substitution effect B. Determinant D. Market size 22. Determinants of Demand A. consumer tastes and preferences B. income E. consumer expectations C. market size D. prices of related goods F. all of the above 23. Price causes changes in demand _____ the curve. Other factors in the change in demand cause a _____ of the curve to the left or the right. A. beyond, blending C. along, shift B. beside, angle D. through, bending 24. When looking at a demand curve, a shift to the left means a(n) _______ in demand. While a shift to the right means a(n) _______ in demand. A. increase, decrease B. decrease, increase 25. Demand: When a the product is not a necessity, there are readily available substitutes, and the product’s cost represents a large portion of consumers’ income—that product is considered A. inelastic B. elastic 26. Demand: When a product is the product is a necessity, there are no or few readily available substitutes, and the product’s cost represents a small portion of the consumers’ income—that product is considered A. inelastic B. elastic 27. The way a business measures the elasticity of its product is to calculate its A. purchasing power. C. total revenue. B. worthiness. D. weight. 28. Supply: When a product can be made quickly, inexpensively, and using a few readily available resources, it is considered A. inelastic B. elastic 29. Supply: When a product takes more time, money, and resources that are not readily available, it is considered A. inelastic B. elastic 30. State whether the demand for each is elastic or inelastic and provide a reason. ITEM ELASTIC/INELASTIC REASON SALT NIKE SHOES 31. Demand Schedule – Plot the information on the available graph. Label the demand curve D1. If the price of a movie ticket was $1.00 $2.00 $5.00 $7.00 $9.00 $11.00 People would buy 600 500 400 300 200 100 32. Supply Schedule – Plot the information on the available graph. Label the supply curve S1. If the price of a movie ticket was $1.00 $2.00 $5.00 $7.00 $9.00 $11.00 Seller would provide 0 100 250 300 500 700 33. What is the equilibrium price? ________ How many tickets would the seller provide at the equilibrium price? _________ 34. DVD prices plummet. Figure out if this affects demand or supply and draw a new curve that reflects the impact. Label it either D2 or S2. 35. The local multiplex theatre is running a special on popcorn and soda. Regularly priced snacks would cost $10.00, but the sale price is $5.00 with free refills. Figure out if this affects demand or supply and draw a new curve that reflects the impact. Label it either D3 or S3.