Download Unit 2 Review

Unit 2 Review
Econ Review for EOC
Question 1
 When
a consumer is able and willing
to buy a good or service, he or she
creates which of the following?
a. consumption
c. elasticity
b. demand
d. allocation
Question 1
 When
a consumer is able and willing
to buy a good or service, he or she
creates which of the following?
a. consumption
c. elasticity
b. demand
d. allocation
Question 2
 How
is future price related to current
demand?
 a. If the price is expected to rise,
current demand will drop.
 b. If the price is expected to fall,
current demand will rise.
 c. If the price is expected to rise,
current demand will rise.
 d. Future price is not related to current
demand.
Question 2
 How
is future price related to current
demand?
 a. If the price is expected to rise,
current demand will drop.
 b. If the price is expected to fall,
current demand will rise.
 c. If the price is expected to rise,
current demand will rise.
 d. Future price is not related to current
demand.
Question 3
 What
does it mean when the demand
for a product is inelastic?
 a. People will not buy any of the
product when the price goes up.
 b. A price increase does not have a
significant impact on buying habits.
 c. Customers are sensitive to the price
of the product.
 d. There are very few satisfactory
substitutes for the product.
Question 3
 What
does it mean when the demand
for a product is inelastic?
 a. People will not buy any of the
product when the price goes up.
 b. A price increase does not have a
significant impact on buying habits.
 c. Customers are sensitive to the price
of the product.
 d. There are very few satisfactory
substitutes for the product.
Question 4
 Which
of the following accurately
states the law of demand?
A. As price increases, the quantity
demanded increases.
B. As price decreases, the quantity
demanded increases.
C. As price decreases, the quantity
demanded decreases.
D. As price decreases, the quantity
consumers substitute increases.
Question 4
 Which
of the following accurately
states the law of demand?
A. As price increases, the quantity
demanded increases.
B. As price decreases, the quantity
demanded increases.
C. As price decreases, the quantity
demanded decreases.
D. As price decreases, the quantity
consumers substitute increases.
Question 5
 Which
of the following describes the
substitution effect?
A. As the price of a good falls, people will
substitute other products.
B. As the price of a good rises, people will
substitute other products.
C. As demand rises, people will substitute
other products.
D. As demand falls, people will substitute
other products.
Question 5
 Which
of the following describes the
substitution effect?
A. As the price of a good falls, people will
substitute other products.
B. As the price of a good rises, people will
substitute other products.
C. As demand rises, people will substitute
other products.
D. As demand falls, people will substitute
other products.
Question 6
 What
kind of table lists the quantity
of a good that a person will buy at
different prices?
a. demand schedule
b. demand curve
c. market demand schedule
d. market demand curve
Question 6
 What
kind of table lists the quantity
of a good that a person will buy at
different prices?
a. demand schedule
b. demand curve
c. market demand schedule
d. market demand curve
Question 7
 Assume
that steak and potatoes are
complements. As the demand for
steak increases,
A. the demand for potatoes will increase.
B. the demand for potatoes will decrease.
C. the demand for potatoes will not
change.
D. the demand for potatoes will change
only slightly.
Question 7
 Assume
that steak and potatoes are
complements. As the demand for
steak increases,
A. the demand for potatoes will increase.
B. the demand for potatoes will decrease.
C. the demand for potatoes will not
change.
D. the demand for potatoes will change
only slightly.
Question 8
 Oreo
Cookies are an example of a
good that is
A. Elastic.
B. Inelastic.
C. Unitary.
D. Delicious.
Question 8
 Oreo
Cookies are an example of a
good that is
A. Elastic.
B. Inelastic.
C. Unitary.
D. Delicious.
Question 9
 New
Kids on the Block was a band
that was popular in the 1980s,
however, their popularity has
declined. Which of the following
would account for a decline in the
demand for their music?
A. A change in income.
B. A change in population.
C. A change in consumer expectations.
D. A change in consumer tastes.
Question 9
 New
Kids on the Block was a band
that was popular in the 1980s,
however, their popularity has
declined. Which of the following
would account for a decline in the
demand for their music?
A. A change in income.
B. A change in population.
C. A change in consumer expectations.
D. A change in consumer tastes.
•How many cups of coffee will be bought if the price of coffee is $3.00?
1.Five.
2.Eight.
3.Twelve.
4.Twenty.
•The price of a cup of coffee has decreased from $3.00 to $1.00. Based on the
information in Graph 1, which of the following statements is true?
1.People will buy four fewer cups of coffee.
2.People will buy eight more cups of coffee.
3.People will buy twenty more cups of coffee.
4.People will not increase or decrease the amount of coffee they buy.
•How many cups of coffee will be bought if the price of coffee is $3.00?
1.Five.
2.Eight.
3.Twelve.
4.Twenty.
•The price of a cup of coffee has decreased from $3.00 to $1.00. Based on the
information in Graph 1, which of the following statements is true?
1.People will buy four fewer cups of coffee.
2.People will buy eight more cups of coffee.
3.People will buy twenty more cups of coffee.
4.People will not increase or decrease the amount of coffee they buy.
Question 10
•A news report on coffee has indicated that there is a link
between drinking coffee and rates of cancer. What can be
expected to happen to the demand for coffee?
A. Demand will increase, and the curve will shift
to the right.
B. Demand will decrease, and the curve will shift
to the right.
C. Demand will increase, and the curve will shift
to the left.
D. Demand will decrease, and the curve will shift
to the left.
Question 10
•A news report on coffee has indicated that there is a link
between drinking coffee and rates of cancer. What can be
expected to happen to the demand for coffee?
A. Demand will increase, and the curve will shift
to the right.
B. Demand will decrease, and the curve will shift
to the right.
C. Demand will increase, and the curve will shift
to the left.
D. Demand will decrease, and the curve will shift
to the left.
Question 11
 What
does elasticity of demand
measure?
A. an increase in the quantity available
B. a decrease in the quantity demanded
C. how much buyers will cut back or
increase their demand when prices rise
or fall
D. the amount of time consumers need
to change their demand for a good
Question 11
 What
does elasticity of demand
measure?
A. an increase in the quantity available
B. a decrease in the quantity demanded
C. how much buyers will cut back or
increase their demand when prices rise
or fall
D. the amount of time consumers need
to change their demand for a good
Question 12
 Which
of the following does NOT
cause a shift of an entire demand
curve?
A. a change in price
B. a change in income
C. a change in consumer expectations
D. a change in the size of the
population
Question 12
 Which
of the following does NOT
cause a shift of an entire demand
curve?
A. a change in price
B. a change in income
C. a change in consumer expectations
D. a change in the size of the
population
Question 13
 What
effect does the availability of
many substitute goods have on the
elasticity of demand for a good?
A. demand is elastic
B. demand is inelastic
C. demand is unitary elastic
D. the availability of substitutes does
not have an effect
Question 13
 What
effect does the availability of
many substitute goods have on the
elasticity of demand for a good?
A. demand is elastic
B. demand is inelastic
C. demand is unitary elastic
D. the availability of substitutes does
not have an effect
Question 14
 The
Latin phrase meaning “all other
things being constant” is ____.
A. E Pluribus Unum
B. vedi, vici, veni
C. Peri Para
D. Ceteris paribus
Question 14
 The
Latin phrase meaning “all other
things being constant” is ____.
A. E Pluribus Unum
B. vedi, vici, veni
C. Peri Para
D. Ceteris paribus
Question 15
 What
term matches the following
definition:
Demand increases for a good as their
income increases.
Question 15
 What
term matches the following
definition:
Demand increases for a good as their
income increases.
Answer: Normal Good
Question 16
 What
is the principle of the law of
supply?
A. The lower the price, the larger the
quantity produced.
B. The higher the price, the smaller the
quantity produced.
C. The higher the price, the larger the
quantity produced.
D. The lower the price, the more
manufacturers will produce the good.
Question 16
 What
is the principle of the law of
supply?
A. The lower the price, the larger the
quantity produced.
B. The higher the price, the smaller the
quantity produced.
C. The higher the price, the larger the
quantity produced.
D. The lower the price, the more
manufacturers will produce the good.
Question 17

Which of the following is the best example of the
law of supply?
A. A sandwich shop increases the number of
sandwiches they supply every day when the
price is increased.
B. A food producer increases the number of
acres of wheat he grows to supply a milling
company.
C. A catering company buys a new dishwasher to
make their work easier.
D. A milling company builds a new factory to
process flour to export.
Question 17

Which of the following is the best example of the
law of supply?
A. A sandwich shop increases the number of
sandwiches they supply every day when the
price is increased.
B. A food producer increases the number of
acres of wheat he grows to supply a milling
company.
C. A catering company buys a new dishwasher to
make their work easier.
D. A milling company builds a new factory to
process flour to export.
Question 18
 Which
of the following is an example
of government influence on supply?
A. law of supply
B. subsidies
C. marginal costs
D. market supply curve
Question 18
 Which
of the following is an example
of government influence on supply?
A. law of supply
B. subsidies
C. marginal costs
D. market supply curve
Question 19

What do sellers do if they expect the price of
goods they have for sale to increase dramatically
in the near future?
A. sell the goods now and try and reinvest the
money in the company.
B. sell the goods now but try and get a higher
price for the item.
C. hold on to the goods until the price rises.
D. hold on to the goods regardless when the
price rises.
Question 19

What do sellers do if they expect the price of
goods they have for sale to increase dramatically
in the near future?
A. sell the goods now and try and reinvest the
money in the company.
B. sell the goods now but try and get a higher
price for the item.
C. hold on to the goods until the price rises.
D. hold on to the goods regardless when the
price rises.
Question 20
 The
price of steel decreases, which
makes cars cheaper to produce.
What would be the effect on supply?
A. Supply of cars will increase.
B. Supply of cars will decrease.
C. Supply of cars will remain the same.
D. Supply of cars will not be affected.
Question 20
 The
price of steel decreases, which
makes cars cheaper to produce.
What would be the effect on supply?
A. Supply of cars will increase.
B. Supply of cars will decrease.
C. Supply of cars will remain the same.
D. Supply of cars will not be affected.
Question 21
 Glass
makers have to comply with a
new regulation making glass
production more expensive. What
can be expected to happen to supply
of glass windows?
A. The supply will increase.
B. The supply will decrease.
C. The supply will remain the same.
D. The supply will be unaffected.

Question 21
 Glass
makers have to comply with a
new regulation making glass
production more expensive. What
can be expected to happen to supply
of glass windows?
A. The supply will increase.
B. The supply will decrease.
C. The supply will remain the same.
D. The supply will be unaffected.

Question 22

Which of these events would indicate a
movement along a supply curve for batteries?
A. Workers at a major battery factory go on
strike and stop production.
B. A new law requires battery manufacturers to
spend more money on environmentally-sound
trash disposal.
C. Battery manufacturers raise the price of eight
AA batteries from $3.50 to $3.95 a set.
D. A new trade agreement enables stores to
import foreign batteries.
Question 22

Which of these events would indicate a
movement along a supply curve for batteries?
A. Workers at a major battery factory go on
strike and stop production.
B. A new law requires battery manufacturers to
spend more money on environmentally-sound
trash disposal.
C. Battery manufacturers raise the price of eight
AA batteries from $3.50 to $3.95 a set.
D. A new trade agreement enables stores to
import foreign batteries.
Question 23
 What
factor has the greatest
influence on the elasticity of supply?
A. profit
B. time
C. labor
D. financing
Question 23
 What
factor has the greatest
influence on the elasticity of supply?
A. profit
B. time
C. labor
D. financing
Question 24
 What
is an excise tax?
A. A measure of the way quantity
supplied reacts to a change in price.
B. The tendency of suppliers to offer
more of a good at a higher price.
C. A government payment that supports a
business or market.
D. A payment to the government on the
production or sale of a good.
Question 24
 What
is an excise tax?
A. A measure of the way quantity
supplied reacts to a change in price.
B. The tendency of suppliers to offer
more of a good at a higher price.
C. A government payment that supports a
business or market.
D. A payment to the government on the
production or sale of a good.
Question 25

The government has eliminated a subsidy
given to corn farmers. What can be
expected to happen to the supply of corn?
A. The supply of corn will increase.
B. The supply of corn will decrease.
C. The quantity supplied of corn will
increase.
D. The quantity supplied of corn will
decrease.
Question 25

The government has eliminated a subsidy
given to corn farmers. What can be
expected to happen to the supply of corn?
A. The supply of corn will increase.
B. The supply of corn will decrease.
C. The quantity supplied of corn will
increase.
D. The quantity supplied of corn will
decrease.
Graph 1. Supply of mp3
Players.
How many mp3 players will be The price of mp3 players has decreased from
$60 to $30. Based on the information in Graph
supplied at $30?
1, which of the following statements is true?
10.
Sellers will supply fewer mp3 players at
50.
$30.
100.
Sellers will supply more mp3 players at
160.
$30.
Sellers will produce the same amount of
mp3 players at $30.
Sellers will leave the market entirely.
Graph 1. Supply of mp3
Players.
How many mp3 players will be The price of mp3 players has decreased from
$60 to $30. Based on the information in Graph
supplied at $30?
1, which of the following statements is true?
10.
Sellers will supply fewer mp3 players at
50.
$30.
100.
Sellers will supply more mp3 players at
160.
$30.
Sellers will produce the same amount of
mp3 players at $30.
Sellers will leave the market entirely.
Question 28
What happens when the price of a good
with an elastic supply goes down?
A. existing producers will expand and some
new producers will enter the market
B. some producers will produce less and
others will drop out of the market
C. existing firms will continue their usual
output but will earn less
D. new firms will enter the market as older
ones drop out

Question 28
What happens when the price of a good
with an elastic supply goes down?
A. existing producers will expand and some
new producers will enter the market
B. some producers will produce less and
others will drop out of the market
C. existing firms will continue their usual
output but will earn less
D. new firms will enter the market as older
ones drop out

Question 29
 What
effect does it have on supply?
The government has required all car
manufacturers to limit the amount of
pollutants exhaust puts into the
atmosphere.
Question 29
 What
effect does it have on supply?
The government has required all car
manufacturers to limit the amount of
pollutants exhaust puts into the
atmosphere.
Answer: Decrease; Gov’t Regulations
Question 30
 What
effect does it have on supply?
The government has given me money
to plant more soybeans this year.
Question 30
 What
effect does it have on supply?
The government has given me money
to plant more soybeans this year.
Answer: Increase; Subsidy
Question 31
 What
effect does it have on supply?
The U.S. imports his oil from Russia.
Russia has recently discovered a new
oil supply.
Answer: Increase; Global Influence
Question 32
 Elastic
or Inelastic??
The price of hand sanitizer increases.
Question 32
 Elastic
or Inelastic??
The price of hand sanitizer increases.
Answer: Elastic
Question 33
 Elastic
or Inelastic???
The price of Ben Franklin’s
manuscripts increases.
Question 33
 Elastic
or Inelastic???
The price of Ben Franklin’s
manuscripts increases.
Answer: Inelastic
Question 34
 Elastic
or Inelastic????
The price of a Van Gogh painting
increases.
Question 34
 Elastic
or Inelastic????
The price of a Van Gogh painting
increases.
Answer: Inelastic
Question 35
 Elastic
or Inelastic???
The price of electric fans increases.
Question 35
 Elastic
or Inelastic???
The price of electric fans increases.
Answer: Elastic
Question 36
 When
buyers will purchase exactly as
much as sellers are willing to sell,
what is the condition that has been
reached?
A. supply and demand
B. excess demand
C. equilibrium
D. price floor
Question 36
 When
buyers will purchase exactly as
much as sellers are willing to sell,
what is the condition that has been
reached?
A. supply and demand
B. excess demand
C. equilibrium
D. price floor
According to this graph, the amount of excess
demand is
100
150
200
250
According to this graph, the amount of excess
demand is
100
150
200
250
Question 38
 Rent
control used in New York City to
control the price of housing is an
example of a(n)
A. price floor
B. price ceiling
C. equilibrium price
D. surplus
Question 38
 Rent
control used in New York City to
control the price of housing is an
example of a(n)
A. price floor
B. price ceiling
C. equilibrium price
D. surplus
Question 39
 Which
of the following is an example
of a shortage?
A. Stores cannot sell all the new popular
toys they have on hand.
B. Manufacturers make too many units of
a popular new toy.
C. Consumers cannot find enough of a
popular new toy in stores.
D. Consumers cannot afford to buy a new
popular toy.
Question 39
 Which
of the following is an example
of a shortage?
A. Stores cannot sell all the new popular
toys they have on hand.
B. Manufacturers make too many units of
a popular new toy.
C. Consumers cannot find enough of a
popular new toy in stores.
D. Consumers cannot afford to buy a new
popular toy.
Question 40
 What
is a price floor?
A. A pristine marble floor upon which to
count obscene amounts of cash.
B.A maximum price that can be legally
charged for a good.
C. A minimum price set by the
government that must be paid for a
good.
D. A price where both supply and demand
meet.
Question 40
 What
is a price floor?
A. A pristine marble floor upon which to
count obscene amounts of cash.
B.A maximum price that can be legally
charged for a good.
C. A minimum price set by the
government that must be paid for a
good.
D. A price where both supply and demand
meet.
Question 41





On which kinds of goods do governments
generally place price ceilings?
A. those that are cheap but could become more
expensive without the ceiling
B. those that are not necessary but have become
customary
C. those that are essential and cheap
D. those that are essential but too expensive for
some consumers
Question 41





On which kinds of goods do governments
generally place price ceilings?
A. those that are cheap but could become more
expensive without the ceiling
B. those that are not necessary but have become
customary
C. those that are essential and cheap
D. those that are essential but too expensive for
some consumers
Question 42
 When
quantity supplied is not equal
to quantity demanded the market is
in
 a. abundant supply
 b. disequilibrium
 c. excess availability
 d. excess supply
Question 42
 When
quantity supplied is not equal
to quantity demanded the market is
in
 a. abundant supply
 b. disequilibrium
 c. excess availability
 d. excess supply
According to Figure 6.2, in this market, a
price of $1.00 would be
According to Figure 6.2, in this
market, a price of $1.50 would be
a the equilibrium c a price ceiling.
. price.
.
a the equilibrium
c a price ceiling.
b a price floor.
d a subsidy.
. price.
.
.
.
b a price floor.
d a subsidy.
.
.
According to Figure 6.2, in this market, a
price of $1.00 would be
According to Figure 6.2, in this
market, a price of $1.50 would be
a the equilibrium c a price ceiling.
. price.
.
a the equilibrium
c a price ceiling.
b a price floor.
d a subsidy.
. price.
.
.
.
b a price floor.
d a subsidy.
.
.
Question 45
 What
is the name of the smallest
amount that can legally be paid to
most workers for an hour of work?
A. equilibrium price
B. supply cost
C. price floor
D. minimum wage
Question 45
 What
is the name of the smallest
amount that can legally be paid to
most workers for an hour of work?
A. equilibrium price
B. supply cost
C. price floor
D. minimum wage
Question 46
A
surplus will develop when
A. the quantity supplied of a good is
greater than the quantity demanded of
that good.
B. the quantity demanded of a good is
greater than the quantity supplied of
that good.
C. the supply and demand curves meet.
D. the supply curve shifts to the right.
Question 46
A
surplus will develop when
A. the quantity supplied of a good is
greater than the quantity demanded of
that good.
B. the quantity demanded of a good is
greater than the quantity supplied of
that good.
C. the supply and demand curves meet.
D. the supply curve shifts to the right.
Question 47
 How
is a surplus eliminated?
A. Sellers raise the price of the good.
B. Sellers lower the price of the good.
C. Buyers stop buying the good.
D. Buyers raise the price of the good.
Question 47
 How
is a surplus eliminated?
A. Sellers raise the price of the good.
B. Sellers lower the price of the good.
C. Buyers stop buying the good.
D. Buyers raise the price of the good.
Question 48
 How
is a shortage eliminated?
A. Sellers raise the price of the good.
B. Sellers lower the price of the good.
C. Buyers stop buying the good.
D. Buyers raise the price of the good.
Question 48
 How
is a shortage eliminated?
A. Sellers raise the price of the good.
B. Sellers lower the price of the good.
C. Buyers stop buying the good.
D. Buyers raise the price of the good.
Question 49
 Which
term matches the following
definition?
a market structure in which a large
number of firms all produce the
same product
Question 49
 Which
term matches the following
definition?
a market structure in which a large
number of firms all produce the
same product
Answer: Perfect Competition
Question 50
 Which
term matches the following
definition?
a product that is considered the same
no matter who produces it
Question 50
 Which
term matches the following
definition?
a product that is considered the same
no matter who produces it
Answer: Commodity
Question 51
 Which
term matches the following
definition?
a market dominated by a single seller
Question 51
 Which
term matches the following
definition?
a market dominated by a single seller
Answer: Monopoly
Question 52
 Which
term matches the following
definition?
a license that gives the inventor of a
new product the exclusive right to
sell it for a certain period of time
Question 52
 Which
term matches the following
definition?
a license that gives the inventor of a
new product the exclusive right to
sell it for a certain period of time
Answer: Patent
Question 53
 Which
term matches the following
definition?
any factor that makes it difficult for a
new firm to become part of a market
Question 53
 Which
term matches the following
definition?
any factor that makes it difficult for a
new firm to become part of a market
Answer: Barrier to Entry
Question 54

What is the definition of an oligopoly?
A. one firm producing 95 percent of the
output
B. two to four firms producing 70 percent to
80 percent of the output
C. eight to ten firms producing 60 percent to
70 percent of the output
D. eight to ten firms producing 90 percent
of the output
Question 54

What is the definition of an oligopoly?
A. one firm producing 95 percent of the
output
B. two to four firms producing 70 percent to
80 percent of the output
C. eight to ten firms producing 60 percent to
70 percent of the output
D. eight to ten firms producing 90 percent
of the output
Question 55

What is monopolistic competition?
A. one company selling the identical
product under different names
 B. one company selling several different
products under different names
 C. a very few companies selling identical
products
 D. many companies selling similar but not
identical products

Question 55

What is monopolistic competition?
A. one company selling the identical
product under different names
 B. one company selling several different
products under different names
 C. a very few companies selling identical
products
 D. many companies selling similar but not
identical products

Question 56

Which of the following is NOT a condition
for perfect competition?
A. Many buyers and sellers participate in
the market.
 B. Sellers offer a wide variety of products.
 C. Buyers and sellers are well informed
about products.
 D. Sellers are able to enter and exit the
market freely.

Question 56

Which of the following is NOT a condition
for perfect competition?
A. Many buyers and sellers participate in
the market.
 B. Sellers offer a wide variety of products.
 C. Buyers and sellers are well informed
about products.
 D. Sellers are able to enter and exit the
market freely.

Question 57





What was the chief effect of the Sherman
Antitrust Act?
A. The federal government repealed regulations
that controlled the airline and trucking industries.
B. Microsoft required personal computer
manufacturers to include its web browser with
the Microsoft Windows operating system.
C. John D. Rockefeller formed the Standard Oil
Trust as a protected natural monopoly.
D. The federal government won the power to
prevent monopolies and mergers that interfered
with trade between states.
Question 57





What was the chief effect of the Sherman
Antitrust Act?
A. The federal government repealed regulations
that controlled the airline and trucking industries.
B. Microsoft required personal computer
manufacturers to include its web browser with
the Microsoft Windows operating system.
C. John D. Rockefeller formed the Standard Oil
Trust as a protected natural monopoly.
D. The federal government won the power to
prevent monopolies and mergers that interfered
with trade between states.
Question 58
 What
is one kind of monopoly that
the U.S. government generally
permits?
A. the telephone company
B. a patent on an invention
C. low-price gasoline
D. all medications