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Unit 2 Study Guide - number and write #1-17 on the back of this paper. Directions—Define the terms, answer the questions, and you will do great on the test. 1. income effect 2 elastic 3inferior good 4 substitute 5 complement 6 subsidy 7 supply schedule 8 diminishing marginal returns 9 marginal cost 10 marginal product of labor 11 start-up costs 12 deregulation 13 commodity 14 patent 15 price discrimination 16 economies of scale 17 monopoly 18. When a consumer is able and willing to buy a good or service, he or she creates what? 4.1 19. What determines the price and the quantity produced of most goods? 4.1 20. What are inferior goods? 4.2 21. What kind of economic system is the United States economy based on? 2.4 22. What kind of table lists the quantity of a good that a person will buy at different prices? 4.1 23. What kind of changes would be expected in the demand of a country that has a growing population? 4.2 24. When prices rise, what happens to your purchasing power if your income does not go up? 4.3 25. Demand for movie rentals is highly elastic. What will happen to a video store that raises the price of its rentals? 4.3 26. Will, a sprinter on the track team, has inelastic demand for sports drinks. The local store has raised the price of a sports drink from $1.00 to $1.50. What will Will’s response to the price change be? 4.3 27. What do sellers do if they expect the price of goods they have for sale to increase dramatically in the near future? Ch 6 28. What happens when the supply of a nonperishable good is greater than the consumers demand for that good? Ch 5 29. Sunshine Island has three large supermarkets that supply most of the groceries for the island’s population. A gas station also sells a very small selection of groceries. How would you describe the market for groceries on Sunshine Island? 7.1 30. In a monopoly market, the market quantity sold will be _____ the quantity sold in a perfectly competitive market. 7.2 31. How does a natural monopoly function? 7.2 32. What is one kind of monopoly that the U.S. government generally permits? 7.2 33. What is it called when the government uses some tool other than money to allocate goods? 6.3 34. Give at least two examples of inelastic goods. 4.3 35. Give at least two examples of elastic good. 4.3