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Name ________________________________________ Date ___________________________ Unit II – How The Market Works Test Review Sheet 1. Inelastic Supply- 2. Elastic Supply- 3. Inelastic Demand- 4. Elastic Demand- 5. Elasticity of Supply- 6. Elasticity of Demand- 7. Supply Schedule- 8. Demand Schedule- 9. Supply Curve- 10. Demand Curve11. How does the use of technology affect production? – 12. What do sellers do if the price of a good is expected to increase shortly? – 13. What happens to the quantity of supply when the price – increases / decreases? – 14. Law of supply- 15. Law of demand16. What happens when the government passes a law setting wages above equilibrium? – 17. Price ceiling- 18. Price floor- 19. Rationing20. Why was there government rationing during World War II? – 21. Minimum wage22. Why would consumers not want to spend much time and energy researching the market? – 23. Monopolistic competition- 24. Commodity- 25. Impact of Internet on business26. Equilibrium27. What happens to income when prices increase? – 28. Excise tax29. Subsidy30. Diminishing marginal returns31. Marginal cost32. Marginal revenue33. Marginal product of labor34. Regulation – 35. How is total revenue determined? – Test Format – 20 multiple choice, 10 matching, 5 short answer (charts/ tables) Name ________________________________________ Date ___________________________ Unit II – How The Market Works Test Review Sheet 1. Inelastic Supply-Any price change, big or small, has little to no impact on quantity supplied 2. Elastic Supply-Even the slightest price change has a major impact on quantity supplied 3. Inelastic Demand-Any price change, big or small, has little to no impact on quantity demanded (ex. Necessary goods like milk, gas ,etc.) 4. Elastic Demand-Even the slightest price change has a major impact on quantity demanded 5. Elasticity of Supply-A measure of the way quantity supplied reacts to a change in price 6. Elasticity of Demand-A measure of how consumers respond to price changes 7. Supply Schedule-A chart that lists how much of a good a supplier will offer at various prices (Market Supply Schedule shows amount supplied for the WHOLE market) 8. Demand Schedule-A chart that lists the quantity of a good a person will buy at various prices in a market (Market Demand Schedule shows amount demanded for the WHOLE market) 9. Supply Curve-A graph of the quantity supplied of a good at various prices 10. Demand Curve-A graph of the quantity demanded of a good at various prices 11. How does the use of technology affect production? – -It leads to increased production at a lower cost (ex. Automobiles – automation) 12. What do sellers do if the price of a good is expected to increase shortly? – -Store the goods until the price increases 13. What happens to the quantity of supply when the price – increases / decreases? – -Quantity supplied increases/ Quantity supplied decreases (Direct Relationship) 14. Law of supply-States that producers offer more of a good as its price increase and less as its price falls 15. Law of demand-States that consumers will buy more or a good when its price is lower and less when its price is higher 16. What happens when the government passes a law setting wages above equilibrium? – -Businesses employ fewer workers than they would at the equilibrium wage 17. Price ceiling-The maximum price that can legally be charged for a good or service (Ex. Rent Control) 18. Price floor-The minimum price for a good or service (Ex. Minimum Wage) 19. Rationing-A system of allocating/ distributing scare goods and services using criteria other than price 20. Why was there government rationing during World War II? – -The government wanted to ensure that every civilian had a minimum standard of living during wartime 21. Minimum wage-A minimum price that an employer can pay a worker for one hour of labor 22. Why would consumers not want to spend much time and energy researching the market? – -If the savings to be made are too small 23. Monopolistic competition-A market structure when there are many businesses that make similar, but not identical products 24. Commodity-A product that is the same no matter who produces it (Ex. – gas, notebook paper, grain) 25. Impact of Internet on business-Has helped to lower start-up costs for businesses 26. Equilibrium-Point at which buyers will purchase exactly as much as sellers are willing to sell 27. What happens to income when prices increase? – -Income buys less (purchasing power declines) 28. Excise tax-A payment to the government on the sale or production of a good 29. Subsidy-A government payment that supports a business or market 30. Diminishing marginal returns-A level of production in which the marginal production decreases with new investment 31. Marginal cost-The cost of producing one more unit of a good 32. Marginal revenue-The additional income from selling one more unit of a good 33. Marginal product of labor-The change in output from hiring one additional unit of labor 34. Regulation – -Government intervention in a market that affects the production of a good 35. How is total revenue determined? – -Selling price of a good times the number of products sold Test Format – 20 multiple choice, 10 matching, 5 short answer (charts/ tables)
