Microeconomics Unit Test

In the United States economy, there is a circular flow of what three things between households, businesses, and markets?

• Resources, stocks, and bonds

• Resources, dividends, and taxes

• Resources, goods, and interest

• Resources, goods, and services

In the circular flow, what is the name of the person who purchases the goods or services from the product market?

• Households or consumers

• Businesses or producers

How do incentives affect the law of supply and demand?

• Incentives affect the consumer by encouraging them to buy goods and services more quickly

• Incentives affect the producer by encouraging them to produce goods and services more quickly

• Incentives encourage the consumer and producer to use the scarce resources they have wisely to get the most return.

• Incentives increase the competition between consumers and producers

What is demand?

• Amount an item costs

• Amount producers are willing to sell

• Amount of goods or services people are willing to buy

• Amount of the incentive

What is supply?

• Amount that determines what is purchased

• Amount producers are willing to sell

• Amount consumers are willing to buy

• Amount an item costs

What is the amount of goods or services available to consumers?

• price

• demand

• incentives

• supply

How does competition among buyers affect price?

• Competition decreases the quality which decreases the price

• Competition increases quality of products which increases price.

• Competition increases production which increases the price.

• Competition increases demand which increases price.

What is the price that both buyers and sellers accept?

• Supply price

• Equilibrium price

• Subsidized price

• Demand price

A manufacturer sets the price for leather handbags below the price equilibrium for the product. What will be most likely to happen as a result?

• The bags will not sell, causing a shortage, and the price of the bags will rise.

• The bags will not sell, causing a surplus, and the price of the bags will decline

• The bags will sell out, causing a surplus, and the price of the bags will decline.

• The bags will sell out, causing a shortage, and the price of the bags will rise.

What would be most likely to increase the equilibrium price of apartment rentals in a particular area?

• An increased supply of building materials

• A decrease in the availability of apartments

• A decrease in demand for apartments

• A surplus of undeveloped land