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Chapter 4 and 5
Economics
The first set of questions will
deal with demand
The degree to which
changes in a good’s price
affect the quantity
demanded by consumers:
Elasticity of Demand
_______ is the key
variable affecting
demand.
Price
A good that can be used to
replace the purchase of
similar goods when prices
rise:
Substitute (Goods)
A good that is commonly
used with other goods:
Complementary
(Goods)
A non-price variable that
affects demand:
(You did a group activity on
this….)
Determinant of Demand
According to the theory of
diminishing marginal returns,
as more units of a product are
consumed, the satisfaction
from consuming each
additional unit ________.
decreases or declines
Demand is _______ when
a small decrease in a
product’s price leads to a
major increase in the
quantity demanded.
(elastic or inelastic)
Elastic
Buying chicken, when the price
of steak rises, is an example of
the ________ __________.
Substitution Effect
The total amount of money a
company receives by selling
goods and services:
Total Revenue
A national advertising campaign by
a bicycle company generates
interest in the sport of mountain
biking. What will happen to the
demand curve for the mountain
bikes?
(shift
to: the left or right)
It will move to the right
True or False:
The law of demand states
that consumers will buy more
of a good when its price is
lower and less when its price
is higher:
True
The information from a
demand schedule plotted
on a graph:
Demand
Curve
The band ‘Discount Brown’ receives
great reviews from around the
country. The band’s popularity rises,
causing the demand curve to shift:
A) To the right
B) To the left
C) Upward to the sky
D) Upward to the moon
A. To the right
A demand curve is only a
“snapshot” of a market
because it:
A) Represents a long period of time
B) Contains only quantities that consumers
are willing to buy
C) Contains only quantities that consumers
are able to buy
D) Represents a specific time period
D. Represents a specific
time period
Any increase or decrease in
consumers’ purchasing
power caused by a change
in price:
Income Effect
If the price of butter falls, what will happen
to demand for substitute goods, such as
margarine:
A) It will remain the same
B) It will rise
C) It will fall
D) It will fluctuate
C. It will fall
If a product is a necessity, it
will tend to have_________
demand.
Inelastic
True or False
Demand schedules and
demand curves chart how
changes in price affect
quantity demanded for a
specific period of time.
True
The passage of time
allows factors other than
price to:
A) Reduce the market size
B) Lower the demand for a product
C) Shift the entire demand curve
D) Increase the demand for a product
C. Shift the entire demand curve
True/False:
Complementary goods are
goods that are bought in
the expectation of having
more income.
False
Complementary goods are
goods that are commonly used
with other goods, such as paint
brushes and paint.
As income rises, demand
for goods:
A) Decreases
B) Increases
C) Remains stable
D) Fluctuates
B. Increases
This is an example of:
A. Demand Curve
B. Income Effect
C. Law of Demand
D. Demand Schedule
D. Demand Schedule
In economics, the desire to own
something and the ability to pay for
it is called:
A) Elasticity of demand
B) Demand
C) Quantity demanded
D) Law of Demand
B. Demand
This is an example of:
A. Demand Curve
B. Income Effect
C. Law of Demand
D. Demand Schedule
A. Demand Curve
The picture is a
classic example
of what factor
with the law of
demand:
Substitution Effect
If the U.S. government prohibited
trade with a foreign country, the
demand curve back in American
for its products sold to that country
would shift:
to the left
True or False:
Private business decisions
have no effect on the market
size:
False
It expands or contracts the
size of the market
This describes demand
whose elasticity is
EXACTLY equal to one:
Unitary-elastic
A type of good that has inelastic
demand:
A) Necessity
B) Want
C) Diminishing marginal utility
D) Substitute
A. Necessity
The next set of questions will
deal with supply
The quantity of goods
and services that
producers offer at
various possible prices
during given time period:
Supply
A tool that shows the
relationship between the
price of a good or service
and the quantity that
producers will supply:
Supply Schedule
The amount of money
remaining after
producers have paid all
of their costs:
Profit
A payment of money to the
government to help fund
government services:
A) subsidy
B) regulation
C) tax
D) cost of production
C) tax
Rent, interest on loans, property
insurance premiums, local and
state property taxes, and
salaries:
A) Variable Cost
B) Total cost
C) Marginal Cost
D) Fixed Cost
D) Fixed Cost
Production costs that changes as
the level of output changes:
A) Variable Cost
B) Total cost
C) Marginal Cost
D) Fixed Cost
A) Variable Cost
The sum of fixed and
variable production costs:
A) Variable Cost
B) Total cost
C) Marginal Cost
D) Fixed Cost
B) Total Cost
Money payment given by the
government to businesses to help
them out is called:
Subsidy
This….plots on a graph
the information
contained in a supplied
schedule.
Supply Curve
In a free enterprise system, the main
key factor affecting the quantity
supplied is:
A) Competition
B) Price
C) Profits
D) Taxes
B. Price
_________ supply exists when
a small change in a good’s price
causes a major change in the
quantity supplied.
Elastic
When loose government regulations pass
new laws in Congress to make it easier on a
company, this will lead to
_________ supply.
A) Fluctuate
B) Decrease
C) Increase
D) Stabilize
C) Increase
A level of production at which the
marginal product of labor decreases
as the number of workers
increases:
A) Marginal Product of labor
B) Increasing Marginal Returns
C) Variable Costs
D) Diminishing Marginal Returns
D) Diminishing Marginal Returns
A business makes a
profit when its revenues
are greater than its:
A) Fixed costs
B) Variable costs
C) Cost of Production
D) Overhead
C) Cost of Production
Gold is an example of a
good that has:
A) Elasticity of supply
B) Inelastic supply
C) Elastic supply
D) Diminishing returns
B. Inelastic supply
Sports teams’ souvenirs are an
example of goods that have:
A. Negative returns
B. Inelastic Supply
C. Elastic Supply
D. Diminishing Marginal Returns
C. Elastic Supply
Which of the following is an example of
a good with inelastic supply:
A. Fine art
B. Space shuttles
C. Beachfront property
D. All of the above
D. All of the above
If a good can be made
quickly and
inexpensively, it has:
A) Elasticity of Supply
B) Inelastic Supply
C) Elastic Supply
D) Diminishing Marginal Returns
C. Elastic Supply
New technology makes the
production of I-pods more efficient
and less expensive. How will this
affect the supply of I-pods:
A) Supply will remain the same
B) Supply will increase
C) Supply will fall
D) Supply will fluctuate
B. Supply will increase
The production costs that do not
change with the level of outputs are
called:
A. Marginal costs
B. Variable costs
C. Fixed costs
D. Total Costs
C. Fixed Costs
The degree to which changes in
price affect the quantity supplied is
called the:
A) Substitution Effect
B) Cost of Production
C) Elasticity of Supply
D) Supply Schedule
C) Elasticity of Supply
Raw materials are an
example of:
A) Marginal costs
B) Variable costs
C) Fixed costs
D) Total costs
B. Variable Costs
With a worker’s wage: (example)
the high school kid making the
fries at McDonalds is an example
of what type of cost to a business:
A) Marginal costs
B) Variable costs
C) Fixed costs
D) Total costs
B. Variable Costs
Depreciation of your capital
goods (your machines in
your plant) is an example of:
A) Marginal costs
B) Variable costs
C) Fixed costs
D) Total costs
C. Fixed Costs
Renting a building for
business is an example of:
A) Marginal costs
B) Variable costs
C) Fixed costs
D) Total costs
C. Fixed Costs
When the U.S. Congress rules on how
companies should conduct business, this is
called a _____________.
A) Regulation
B) Tax
C) Subsidy
D) Average Cost
A) Regulation
Last Question:
This is an
example of a
supply
_______.
Curve
Last Question:
This is an
example of
supply
________.
Schedule