Unit 3: The Price is Right Review

What is shown by the intersection of the supply curve and the demand curve?

• • the maximum price consumers will pay

• • the amount that supply influences demand

• • the equilibrium price of a good or service

• • the cost of production for a commodity

Which accurately describes the effect of a situation of scarcity?

• • A car company has a slow-down in sales, driving it to offer a cash-back rebate.

• • There's a shortage of oil, pushing car companies into researching alternative fuels.

• • A car company produces fewer cars than consumers demand, leading to a rise in prices.

• • There's a reduction in the cost of steel, enabling a car company to reduce the sale price of its cars.

When would the price of a good be most likely to increase?

• • The level of production rises to catch up with a sudden rise in consumer demand.

• • A rise in demand happens too quickly for producers to increase production to keep up.

• • The development of a new energy source reduces production costs for a company.

• • There's a sudden increase in the number of companies competing to sell the good.

What happens when someone orders a second dessert when he or she is already full from the first dessert?

• • decrease in overall demand

• • less efficient production of desserts

• • increase in the economies of scale

• • lowered utility of the dessert.

Which situation best shows consumers having inelastic demand?

• • People start using maple syrup because they are making a larger income.

• • People give up eating red meat in order to have a healthier heart.

• • People cannot quit drinking coffee even though they want to cut down on caffeine intake.

• • People don't go to a restaurant because there are no vegetarian-only dishes offered.

Which factor is a problem for the production of public goods?

• • possibility of free riders

• • inefficient production

• • rivalry among consumers

• • increasing demand curve

Which is not a factor that affects the level of wages?

• • size of the labor pool

• • level of immigration

• • gross domestic product

• actions of labor unions

Which limits the freedom of workers in the labor market?

• • inflexibility of the work force

• • availability of education

• • level of the minimum wage

• • existence of industrial robots

Immigration can result in an increase in the supply of labor.

Therefore, which situation can be a result of immigration?

• increase in the bargaining power of unions

• severe restrictions on citizenship

• passage of minimum-wage laws

• general decrease in wages

How do unions help workers get better wages?

• • The collective bargaining power of unions puts workers on a more equal level with employers.

• • Unions provide workers with the educational opportunities needed to get the best-paying jobs.

• • Work slowdowns sponsored by unions help employers cut production costs and increase sales.

• • The high level of union dues pushes workers into demanding better wages so they can afford their dues.