AnswersOC27 Economics-2102310-Sem-MeadowsUnit Test

Unit 2 Test Answers

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Which statement best explains the law of demand?

A
The quantity demanded by consumers increases as prices rise, then decreases as prices fall.
B
The quantity demanded by consumers decreases as prices rise, then increases as prices fall.
C
The quantity demanded by producers increases as prices rise, then decreases as prices fall.
D
The quantity demanded by producers decreases as prices rise, then increases as prices fall.
82
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Disequilibrium occurs when

A
quantity supplied is equal to quantity demanded.
B
quantity supplied does not equal quantity demanded.
C
supply coordinates with price.
D
supply coordinates with quantity.
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best

I
Incentives are mostly positive.
I
Incentives are mostly negative.
I
Incentives can be positive or negative.
I
Incentives are neither positive nor negative.
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A limited amount of goods available means that excess is occurring.

Answer:

demand

85

The vertical axis of a demand curve shows

A
the price of a product.
B
the supply of a product.
C
the interest in a product.
D
the production cost of a product.
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Equilibrium is defined when

A
supply is limited and demand decreases.
B
supply and demand meet.
C
demand is higher than supply.
D
supply is higher than demand.
87

The graph shows a point of equilibrium.What does "Q” represent on the graph?

Question illustration
A
the point where equilibrium is achieved
B
the quantity at the equilibrium point
C
the average cost of goods sold
D
the point where supply and demand drop
88

Which most likely results from producers engaging in specialization?

A
Producers reduce their costs.
B
Producers increase their market share.
C
Producers decrease the materials needed for production.
D
Producers always offer more competitive pricing.
89

Why is the automobile industry considered an oligopoly? Select all that apply.It offers little differentiation within the market.It has significant barriers to entry.It is controlled by companies that patent key technology.It relies on price variation to attract customers.It depends on brand loyalty and image to generate sales.It is dominated by a few key players.

A
It offers little differentiation within the market.
B
It has significant barriers to entry.
C
It is controlled by companies that patent key technology.
D
It relies on price variation to attract customers.
E
It depends on brand loyalty and image to generate sales.
F
It is dominated by a few key players.
90

What is the difference between a price floor and a price ceiling?

A
A price floor is the minimum price allowed for a good. A price ceiling is the maximum price allowed for a good.
B
A price floor is the maximum price allowed for a good. A price ceiling is the minimum price allowed for a good.
C
A price ceiling below the equilibrium price has no effect.
D
A price floor above the equilibrium price has no effect.
91

The graph shows excess demand.Which explains why the price indicated by p2 on the graph is lower than the equilibrium price?

Question illustration
A
As prices fall, quantity demanded goes up.
B
As prices fall, quantity demanded goes down.
C
As prices fall, quantity demanded stays the same.
D
As prices fall, quantity demanded disappears.
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[BLANK]

A
Production possibility
B
Absolute advantage
C
Competition
D
Specialization
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What happens when the quantity of a good supplied at a given price is greater than the quantity demanded?

e
excess supply
s
stable prices
e
exact equilibrium
i
increased production
94

Which best describes the availability of substitutes in a monopoly?

A
Price points vary.
B
There are no substitutes.
C
There are different brands.
D
Products have different features.
95

The graph shows a point of equilibrium.If the quantity supplied is greater than the quantity demanded, what must happen to the price in order to reach equilibrium?

Question illustration
A
The price of the product will increase to meet equilibrium.
B
The price of the product will decrease to meet equilibrium.
C
Supply and demand must be raised.
D
Supply and demand must be lowered.
96

Why is competition limited in an oligopoly?

A
High entry costs prevent new producers from entering the market.
B
Producers completely refuse to engage in price wars.
C
No major distinctions exist between producers.
D
Producers actively segment the market to avoid competition.
97

A consumer might respond to a negative incentive by

A
purchasing more of the products.
B
buying the good at a cheap price.
C
receiving a discount.
D
decreasing use of the product to save money.
98

Which statement best describes incentives?

A
Incentives are mostly positive.
B
Incentives are mostly negative.
C
Incentives can be positive or negative.
D
Incentives are neither positive nor negative.
99

Natural monopolies occur when one producer

A
can meet the market’s entire demand.
B
controls the method of production.
C
is the only one authorized to produce a given product.
D
creates unique products.
100

Which best describes the availability of substitutes in a monopoly?

A
Price points vary.
B
There are no substitutes.
C
There are different brands.
D
Products have different features.

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