Question 1(5 points)

You learned in Unit 3 that changes in demand are caused by non-price determinants of demand that can be remembered by the acronym TRIBE. You learned that changes in supply are caused by non-price determinants of supply that can be remembered by the acronym ROTTEN. List 5 non-price determinants of either demand or supply that cause changes in the market. To receive credit, you have to indicate whether the non-price determinant you listed affects demand or supply.

Your answer:

Question 2(5 points)

Describe how you are a participant in the Circular Flow of the Economy.

Your answer:

Question 3(3 points)

When the supply curve shifts to the left, it indicates a(n) ________ .

a

increase in supply

b

decrease in supply

c

increase in demand

d

decrease in demand

Question 4(3 points)

A change in supply is when suppliers offer different amounts of a product for all at all possible ________.

a

quantities

b

prices

c

elasticities

d

determinants

Question 5(3 points)

A new piece of technology is invented that allows for quicker production. What is likely to happen?

a

increase in supply

b

decrease in supply

c

increase in demand

d

decrease in demand

Question 6(3 points)

When the supply curve shifts to the right, it indicates a(n) ________ .

a

increase in supply

b

decrease in supply

c

increase in demand

d

decrease in demand

Question 7(3 points)

Which graph best explains the effect of Publix opening a new store?

a

Graph A

b

Graph B

c

Graph C

d

Graph D

Question 8(3 points)

Which graph best explains the effect on a business when the price of computers increases?

a

Graph A

b

Graph B

c

Graph C

d

Graph D

Question 9(3 points)

Which graph best explains the effect on a steel business when the price of iron ore decreases?

a

Graph A

b

Graph B

c

Graph C

d

Graph D

Question 10(3 points)

Which graph best explains the effect on consumers who expect the price of products to increase in the future?

a

Graph A

b

Graph B

c

Graph C

d

Graph D

Question 11(3 points)

Using the information on the graph below, choose the answer that best represents what happens to Syrup when the Syrup Businesses increase the price of a bottle of Syrup

a

A to B

b

B to A

c

D1 to D2

d

D1 to D3

Question 12(3 points)

Using the information on the graph below, choose the answer that best represents what happens to Coca Cola when there is a sale on Coca Cola.

a

A to B

b

B to A

c

D1 to D2

d

D1 to D3

Question 13(3 points)

Which graph best explains the effect on an inferior good when there is an increase in income?

a

Graph A

b

Graph B

c

Graph C

d

Graph D

Question 14(3 points)

Using the information on the graph below, choose the answer that best represents what happens to Syrup when the Syrup Businesses offer a buy one Syrup get one free deal.

a

A to B

b

B to A

c

D1 to D2

d

D1 to D3

Question 15(3 points)

Using the information on the graph below, choose the answer that best represents what happens to Syrup when the Syrup Businesses offers employees a new health plan paid for by the company.

a

A to B

b

B to A

c

S1 to S2

d

S1 to S3

Question 16(3 points)

Using the information on the graph below, choose the answer that best represents what happens to Syrup when the Federal Government reduces the subsidy they have been giving to each Syrup Company.

a

A to B

b

B to A

c

S1 to S2

d

S1 to S3

Question 17(3 points)

If the demand for a product decreases, while the supply stays the same, what can we say for sure will happen to price and quantity?

a

price will increase, while quantity decreases

b

price will increase, while quantity increases

c

price will decrease, while quantity increases

d

price will decrease, while quantity decreases

Question 18(3 points)

What sort of relationship do price and quantity have in relation to demand?

a

inverse

b

direct

c

equal

d

there is no relationship

Question 19(3 points)

An inferior good is ____________.

a

a good that we use everyday

b

a good that we buy more of with increases in income

c

a good that we buy less of with increases in income

d

a good that we buy regardless of price

Question 20(3 points)

A normal good is ____________.

a

a good that we use everyday

b

a good that we buy more of with increases in income

c

a good that we buy less of with increases in income

d

a good that we buy regardless of price

Question 21(3 points)

According to the circular flow graph below, which statement would best describe curve A?

a

Business Income

b

Household Spending

c

Household Income

d

Goods and Services

Question 22(3 points)

According to the circular flow graph below, which statement would best describe curve E?

a

Business Income

b

Household Spending

c

Household Income

d

Goods and Services

Question 23(3 points)

According to the circular flow graph below, which statement would best describe curve C?

a

Business Income

b

Household Spending

c

Household Income

d

Goods and Services

Question 24(3 points)

The market where businesses compete for resources to make goods and services is the ____________.

a

product market

b

household income

c

factor market

d

business income

Question 25(3 points)

The graph below shows what effect on equilibrium price and equilibrium quantity?

a

an increase in equilibrium price with a decrease in equilibrium quantity

b

a decrease in price with an increase in equilibrium quantity

c

an increase in price with an increase in equilibrium quantity

d

a decrease in price with a decrease in equilibrium quantity

Question 26(3 points)

According to the graph below, what condition would be created if the price was set was set lower than equilibrium, say at $2?

a

The market would be at equilibrium

b

a surplus would be created

c

a shortage would be created

d

there would be no change in consumer or producer activity

Question 27(3 points)

The graph below shows what effect on equilibrium price and equilibrium quantity?

a

an increase in equilibrium price with a decrease in equilibrium quantity

b

a decrease in equilibrium price with an increase in equilibrium quantity

c

an increase in equilibrium price with an increase in equilibrium quantity

d

a decrease in equilibrium price with a decrease in equilibrium quantity

Question 28(3 points)

The graph below shows what effect on equilibrium price and equilibrium quantity?

a

an increase in equilibrium price with a decrease in equilibrium quantity

b

a decrease in equilibrium price with an increase in equilibrium quantity

c

an increase in equilibrium price with an increase in equilibrium quantity

d

a decrease in equilibrium price with a decrease in equilibrium quantity

Question 29(3 points)

Flighty Forsure, world traveler, says if the airlines want to attract more passengers, they should lower fares for business travelers as well as for vacationers. What is the economist's view of this policy position?

a

A great idea!

b

Wrong!Vacationer's demand for plane tickets is inelastic so the price should be decreased.

c

Wrong!Business traveler's demand for plane tickets is inelastic so the price should be increased.

d

When price is dropped for an inelastic product, TR rise.

Question 30(3 points)

If a product has many substitutes, demand for that product tends to be __________.

a

elastic

b

perfectly inelastic

c

unit elastic

d

perfectly inelastic

Question 31(3 points)

When the price of a good is below equilibrium what situation exists? What corrects the situation?

a

Market clearing; the federal government raises the price.

b

There is a surplus of the good; consumers bid down the price

c

A price ceiling has been hit; the government lowers the price.

d

There is a surplus of the good; consumers bid up the price.

Question 32(3 points)

What term explains when the government establishes the maximum price a good can be sold for?

a

Surplus

b

Market Clearing Price

c

Price Floor

d

Price Ceiling