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The Test
100
The quantity of a good or service demanded in a market is more than the quantity supplied
Shortage
100
When the quantity of a good or service supplied in a market is more than the quantity demanded
Surplus
100
A measure of how consumers react to a change in price
Elasticity of demand
100
The minimum price that must be paid for a good or service
price floor
100
Founded on September 26, 1914, its mission is to prevent business practices that are anticompetitive or deceptive or unfair to consumersand to enhance informed consumer choice and public understanding of the competitive process.
Federal Trade Commission
200
A maximum price that can be legally charged for a good or service
Price ceiling
200
List two examples of inelastic goods.
Answers will vary
200
What is plotted on the vertical axis of a demand curve?
Price
200
When a market is dominated by a few large, profitable firms who possess significant market power (usually 70-80% of product output), thus preventing smaller firms from entering the market
Oligopoly
200
A government payment that supports a business or market
subsidy
300
List three factors that can cause a shift in demand.
Income change, Price changes in complementary goods, consumer expectations, consumer tastes and advertising
300
This Act, passed by Congress in 1890, gave the government the power to regulate business in the U.S.
Sherman Antitrust Act
300
List the four conditions of perfect competition.
Many sellers, as well as buyers, participate in the market. Sellers offer identical products. Sellers, as well as buyers, are well informed about products. Sellers are able to enter and exit the market freely
300
When does excess demand occur?
When quantity demanded is more than quantity supplied
300
How would the supply of apples probably be affected if the price of apples was expected to drop in the near future?
The supply would increase just before the price drop
400
Would you expect to see branding in a monopolistic competitive market?
Yes, because these firms must differentiate themselves from their competitor’s products
400
Assuming that the price of chicken has gone up $1. What effect will this have on the supply of chicken?
The supply will increase.
400
The tendency of suppliers to offer more of a good at a higher price
Law of supply
400
If supply is inelastic, how will supply react to a small increase in price?
Supply will stay relatively the same
400
Markets that run most efficiently when one large firm provides all of the output
Natural monopoly
500
List two examples of complementary goods.
Answers will vary
500
Many companies compete in an open market to sell products that are similar but not identical
monopolistic competition
500
The point of balance at which the quantity demanded is equal to the quantity supplied
equilibrium
500
What is best known example of a price floor?
minimum wage
500
The factors that determine whether there is a shift in the demand curve.
Demand determinants