Unit Test — Unit test Answers

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1
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Price controls on goods can be set by

A
consumers.
B
economists.
C
governments.
D
producers.
2
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Consumer demand is defined as

A
how frequently the prices change.
B
the willingness and ability people have to buy a good.
C
how frequently the people are willing pay for something.
D
how often people want something delivered.
3

If consumer sovereignty is considered greatest in a system of pure competition, why is sovereignty still limited?

A
Consumers still rely on producers’ set prices.
B
Few products are actually sold on the basis of pure competition.
C
Choices are driven by price when goods are identical.
D
Limited price variations restrict actual choice.
4

[BLANK]

A
debts
B
profits
C
expenses
D
costs
6

Which explains the connection between the law of demand and excess demand?

A
The law states that decreases in price leads to greater quantity demanded and limited supply, which occurs during excess demand.
B
The law states that increases in price increases leads to greater quantity demanded and limited supply, which occurs during excess demand.
C
The law states that decreases in price leads to greater supply and equilibrium, which occurs during excess demand.
D
The law states that increases in price leads to greater supply and equilibrium, which occurs during excess demand.
8

[BLANK]

A
demand curve
B
supply curve
C
equilibrium point
D
excess supply
9

Which best explains why the law of supply operates the way it does in a free enterprise economy?

A
Companies want to produce more goods than their rivals.
B
Companies want to reward loyal consumers with low prices.
C
Companies want to hire as many workers as possible.
D
Companies want to be as profitable as possible.
10

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.
11

The point of maximum profit is the point at which the marginal cost equals the

A
marginal revenue.
B
market price.
C
total revenue.
D
production cost.
12

Which is an example of a product that is considered a need?

A
breakfast food
B
music player
C
sports equipment
D
video game
13

In order to calculate marginal cost, producers must compare the difference in the cost of producing one unit to the cost of

A
purchasing a unit.
B
distributing that unit.
C
producing the next unit.
D
producing a different unit.
14

Which best explains why producers choose to specialize? Choose two answers.

A
to increase competition
B
to gain a comparative advantage
C
to decrease the amount of goods produced
D
to maintain market share
E
to increase efficiency
15

Which factors must a producer consider when deciding what good to supply? Check all that apply.

A
the appeal of the good to family members
B
the elasticity of a good being supplied
C
competition within the market
D
the ability to produce the good efficiently
E
the ability to produce a good of low quality
16

Which aspect of monopolistic competition gives consumers more choice?

A
Producers rely on consumer decisions to succeed.
B
Price is not an important factor.
C
Few barriers to market entry exist.
D
Producers are more concerned about selection than profits.
17

On a graph, an equilibrium point is where

A
a supply curve and a demand curve meet.
B
a supply curve is higher than a demand curve.
C
the supply and demand curves head up.
D
the supply and demand curves head down.
18

Which scenario is the best example of an opportunity cost?

A
A computer company issues a recall on its tablets.
B
A computer company produces fewer laptops to meet tablet demand.
C
A computer company reduces the price on last year’s models.
D
A computer company stops making computers with CD/DVD drives.
19

According to the law of demand, as prices decrease, the quantity demanded

A
decreases.
B
increases.
C
stays the same.
D
disappears.

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