Unit 2: Microeconomics Test Review

● Many sellers in market

● Products are identical

● Easy to enter and exit the market

These above characteristics describe what market structure?

• Monopoly

• Oligopoly

• Monopolistic competition

• Pure (perfect) competition

The six determinants listed are changes associated with what thing?

Change in the cost of productive resources (Input Costs)

Change in government regulations (Taxes or Subsidies)

Change in the number of sellers

Change in producer expectations

Change in technology

Change in education

• Supply

• Demand

The actions of consumers in response to changes in prices?

• Law of Supply

• Law of Demand

The 5 determinants (changes) are associated with what thing?

Change in price of related goods- (Complementary & Substitute Goods)

Changes in consumer income

Change in consumer expectations

Change in consumer tastes for a product

Change in number of consumers in the Market

• Supply

• Demand

Households sell resources, while businesses buy resources in what model?

• Rectangular Flow Model

• Supply Schedule

• Circular Flow Model

• Demand Schedule

Consumers are told that the consumption of broccoli will significantly reduce the risk of cancer. Which of these scenarios is likely to happen in the broccoli market?

• The demand curve will shift to the left and the price of broccoli will fall.

• The demand curve will shift to the right and the price of broccoli will rise.

• The supply curve will shift to the right and the price of broccoli will fall.

• The supply curve will shift to the right and the price of broccoli will rise.

The total quantity of a good or service that is available for sale at any given price?

• Supply

• Demand

Which graph illustrates an increase in quantity demanded caused by a decrease in price?

• 
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• 
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How do buyers help determine the market clearing price (market equilibrium) of a good?

• Buyers seek the highest possible price for the good, sellers seek the lowest price for the good, and these interests intersect at the market clearing price.

• Sellers compete with each other to convince buyers to pay the highest price for a particular good.

• Buyers compete with each other to convince sellers to offer the lowest prices for a particular good.

• Buyers seek the lowest possible price for the good, sellers seek the highest price for the good, and these interests intersect at the market clearing price.

What flows from businesses to households through the resource market?

• income

• expenditures

• revenue

• labor