Economic Foundations
Laws of Demand and Supply
Elasticity
Non-price determinants
Graphing
100
Scarcity exists because:
a. Resources are unlimited but wants are limited.
b. Unlimited wants exceed limited resources.
c. Resources and wants are both unlimited.
d. No choices describe scarcity.
b. Unlimited wants exceed limited resources.
100
If the price of movie tickets increases and the demand for streaming services increases, these goods are:
Complements
100
Cat food for cat owners is usually considered:
a. Elastic Demand, Elastic Supply
b. Inelastic Demand, Elastic Supply
c. Elastic Demand, Inelastic Supply
d. Inelastic Demand, Inelastic Supply
Inelastic Demand, Inelastic Supply
- It is NEEDED item that is easy to produce.
100
“A viral social media trend encourages drinking green tea daily. Stores report a 40% increase in green tea purchases.”
The increased demand is due to:
Consumer tastes and preferences
100
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A movement along a demand curve demonstrates:
a. A change in demand
b. A change in quantity demanded
c. An increase in supply
d. A decrease in supply
A change in quantity demanded
200
Every society must answer which basic economic question(s)?
a. How to increase government revenue.
b. What to produce, how to produce it, and for whom to produce.
c. How to eliminate scarcity entirely.
d. How to keep prices from increasing.
What to produce, how to produce it, and for whom to produce.
200
If the price of smartphones rises, what will happen to the demand for phone cases?
Demand decreases
200
Which product typically has inelastic demand and inelastic supply?
a. Designer jeans
b. Museum posters
c. Life-saving medicine
d. Candy
Life-saving medicine
It is a necessity (Inelastic Demand) that is easy to produce (elastic supply)
200
As more families move to the suburbs, coffee shops open more suburban branches. They are attempting to increase profits by:
Increasing demand through market size
200
A shift of the supply curve from S to S1 indicates:
a. A change in the price of the product
b. A change in resource costs or technology
c. A change in consumer income
d. A change in market size
A change in resource costs or technology
300
You decide to work full-time instead of taking a free internship. What is an opportunity cost for this?
examples:
1. Experience you would have gained at the internship.
2. The network connections made at the internship.
3. Skills you could have learned from the internship.
300
According to the law of supply, producers tend to:
a. Supply more when price is higher
b. Supply more when price is lower
c. Supply the same amount regardless of price
d. Stop producing when demand rises
Supply more when price is higher
300
A steep demand curve represents:
a. Elastic supply
b. Inelastic demand
c. Elastic demand
d. Inelastic supply
Inelastic demand
-Any change in price will have little effect on demand
300
A bakery buys a new oven that bakes bread twice as fast. What happens to supply and what non-price determinant is responsible?
Supply increases due to technological improvements
300
Which graph change indicates many new buyers entering a market?
a. Shift from D0 to D1 (rightward shift)
b. Shift from D0 to D2 (leftward shift)
Shift from D0 to D1 (rightward shift)
400
An economic system based on customs, tradition, and long-standing practices is called a:
a. Market Economy
b. Command Economy
c. Traditional Economy
Traditional Economy
400
Government subsidies for farmers will usually:
a. Increase supply
b. Decrease supply
c. Eliminate shortages
d. Increase demand
Increase supply
400
A very flat supply curve represents:
a. Inelastic supply
b. Elastic supply
c. Inelastic demand
d. Elastic demand
Elastic supply
400
When average incomes rise in a city, sales of restaurant meals increase. Which non-price determinant caused the change in demand?
a. Consumer expectations
b. Market size
c. Consumer income
d. Price of substitutes
Consumer Income
400
Which situation would cause a shift from D0 to D1 (an increase in demand)?
a. A rise in consumer income
b. A decrease in the number of sellers
c. New production technology improves supply
d. Workers’ wages are cut across the state
A rise in consumer income
500
If the price is at 1.80 then there would be a:
a. Shortage
b. surplus
Surplus
500
Where is equilibrium price located?
Price: 1.40
Quantity: 600
500
A 10% increase in the price of a certain brand of chips causes a 30% decrease in the quantity demanded. This product can be described as having…
a. Inelastic demand
b. Elastic demand
c. Perfectly inelastic demand
d. Unit elastic demand
Elastic demand
500
If consumers expect laptop prices to rise next month, what will happen to demand today?
Demand will increase
500
If the government wanted to keep prices low for consumers they would create a:
a. Price floor at 1.20
b. Price ceiling at 1.20
b. Price ceiling at 1.20