Changes in Market Equilibrium
The Role of Prices
Market Structures
The Economy — GDP, Unemployment, Inflation
Government & Business
The Business Cycle
100
What is it called when a factor other than price causes consumers to buy more or less of a product?
What is a change in demand.
100
Prices send signals to consumers and producers — what do they communicate?
What is they signal what is happening in the market.
100
In a perfectly competitive market, all products are __________.
What is Standardized
100
Write the formula for calculating GDP.
GDP = C + I + G + (X - M)
100
What is the main goal of antitrust laws?
What it to promote competition and prevent monopolies.
100
What are the four main phases of the business cycle?
What are Expansion, Peak, Contraction (Recession), Trough.
200
A rise in input costs will cause the supply curve to shift in which direction?
What is Left (decrease in supply).
200
Higher prices encourage __________ to produce more and discourage __________ from buying as much.
What is Producers; consumers.
200
What is a monopoly, and how many firms dominate the market?
What is one firm controls the entire market.
200
Using the data: C=500, I=150, G=200, X=50, M=30, what is GDP?
GDP = 500 + 150 + 200 + (50 - 30) = 870
200
The Sherman Antitrust Act prohibits what type of business behavior?
What is collusion and restraint of trade.
200
During which phase does GDP rise, unemployment fall, and spending increase?
What is Expansion.
300
How does consumer income affect demand for normal goods?
What is higher income → increase in demand for normal goods.
300
What does it mean when we say prices are “neutral”?
What is, they don't favor buyers or sellers.
300
In monopolistic competition, firms compete using what type of non-price strategies?
What is advertising, branding, service, quality differences.
300
If 800 out of 10,000 people in the labor force are unemployed, what is the unemployment rate?
(800 ÷ 10,000) × 100 = 8%
300
What is the difference between regulation and deregulation?
Regulation = more government control
Deregulation = fewer rules, more competition.
300
What is the difference between a recession and a depression?
Recession: GDP down ≥6 months
Depression: long, severe downturn
400
What happens to equilibrium price and quantity when demand increases?
What is price rises and quantity increases.
400
How do prices act as incentives in a market economy?
What is they motivate producers and consumers to act (buy or sell).
400
What is an oligopoly, and how do firms often behave toward one another?
What is few large firms; may engage in price wars or collusion.
400
If bread costs $2.50 last year and $2.75 this year, what is the inflation rate?
((2.75 - 2.50) ÷ 2.50) × 100 = 10%
400
Name one advantage and one disadvantage of a monopoly.
Advantage: high profits
Disadvantage: higher prices, less consumer choice.
400
Identify two common causes of a business cycle contraction.
What are falling investment, rising interest rates, or external shocks.
500
Give two examples of factors that can shift supply and explain their effects.
Example: Input costs ↑ → supply ↓; technology ↑ → supply ↑.
500
Explain how flexibility in prices helps restore equilibrium during a surplus or shortage.
What is prices rise during shortages → supply increases; prices fall during surpluses → demand increases.
500
Compare the number of firms, product types, and price control in all four structures: Perfect Competition, Monopoly, Monopolistic Competition, and Oligopoly.
Perfect: many firms, identical products, no control
Monopoly: one firm, unique product, full control
Monopolistic: many firms, differentiated products, limited control
Oligopoly: few firms, similar products, some control
500
Explain how rising GDP, low unemployment, and mild inflation indicate an economy’s phase in the business cycle.
What is expansion phase — high GDP, low unemployment, moderate inflation.
500
Explain how government regulation and deregulation can each affect competition and consumers.
What is regulation prevents unfair practices; deregulation increases efficiency but can reduce oversight.
500
Explain how GDP, unemployment, and inflation change across all four phases of the business cycle.
Expansion: GDP ↑, unemployment ↓, inflation steady
Peak: GDP high, inflation rising
Contraction: GDP ↓, unemployment ↑, inflation falls
Trough: GDP low, unemployment high.