Economics Unit 2

Which of these names the only thing that can cause movement along a demand curve?

• Unit elastic demand

• a substitution

• a change in price

• diminishing satisfaction

Which term refers to a changing price that causes a proportional change in total revenue?

• elastic

• unit elastic

• inelastic

• total expenditures

Prices for common vegetables tend to be elastic. Why?

• because other vegetables are available.

• because consumers must eat.

• because vegetables cannot be substituted.

• because vegetables are inexpensive.

Which of these tends to force the price of an item downward?

• a surplus of that item

• a shortage of that item

• attainment of an equilibrium price for that item

• attainment of an equilibrium quantity of that item

Equilibrium is reached when what occurs?

• quantity supplied equals quantity demanded

• there is no change in the quantity supplied

• price increases

• prices are inelastic

What do most economists believe is the most efficient way to allocate resources?

• competitive markets

• rationing

• government action

• distorted incentives

When the price of something increases, the quantity demanded____

• increases

• decreases

• remains unchanged

• reverses

Which of these best describes the influence of high prices on the behavior of producers?

• High prices are an incentive for producers to produce less.

• High prices are an incentive for producers to produce more.

• High prices have no significant influence on the behavior of producers.

• High prices influence producers to use fewer raw materials and less labor.

Which of these best describes prices in a market economy?

• a signal for consumers to purchase less

• a signal for producers to manufacture less

• a set of compromises between buyers and sellers

• a set of compromises between the government and citizens

In a competitive market economy, prices are considered

• dictated

• uncompromising

• favorable

• neutral