Econ Units 3-5 REVIEW

The demand schedules reflect the law of demand by-

• A. showing increased demand as prices fall

• B. showing decreased demand as prices fall

• C. demonstrating that changing prices don't affect demand

• D. detailing how demand fluctuates as prices increase or decrease

Which of the following business decision scenarios can be explained by the law of supply?

• A. A software company releases new versions of a popular program because the price is affordable.

• B. A car company limits production of minivans because they are cheaper to produce than sedans.

• C. A bakery makes more cakes because consumers pay higher prices for cakes than other baked goods.

• D. A grocery store stocks its produce section with organic goods because they cost less than nonorganic items.

How can a grocery store use responsive pricing to deal with an overstock of cereal?

• A. The store can increase the price of cereal.

• B. The store can decrease the price of cereal.

• C. The store can advertise a sale on cereal.

• D. The store can advertise the nutritional value of cereal.

How would Adam Smith respond to a law that required businesses to donate a percentage of earnings to charity?

• A. He would strongly support the requirement.

• B. He would argue that the requirement limits economic growth.

• C. He would insist that a minimum percentage be established to fulfill the requirement.

• D. He would encourage the government to extend the requirement to foreign companies.

The photograph provides evidence that prices are—

• A. responsive

• B. impractical

• C. accurate

• D. consistent

"[In] 1971, concerned with dwindling reserves of natural gas, the FPC [Federal Power Commission] raised price ceilings in an effort to stimulate production." What conclusion can be drawn from the excerpt about the use of government restrictions to influence the supply of natural gas?

• A. The government raised the price ceiling on natural gas to reduce the supply, while stimulating profits for natural gas companies.

• B. The government raised the price ceiling on natural gas to trigger a price increase, while encouraging production of alternative energy sources.

• C. The government raised the price ceiling on natural gas to increase supply, while maintaining an affordable price for an essential resource.

• D. The government raised the price ceiling on natural gas to discourage competition between natural gas suppliers, while investing in natural gas production.

What is the result of rent control, according to the graph?

• A. A shortage of apartments

• B. A surplus of apartments

• C. Equilibrium at $600

• D. A price floor of $900

How does technology typically affect supply, and how would this be reflected in a supply curve?

• A. Technology typically increases supply, which results in a rightward shift in the supply curve.

• B. Technology typically decreases supply, which results in a leftward shift in the supply curve.

• C. Technology typically has no effect on supply, and thus the supply curve is unchanged.

• D. Technology either increases or decreases supply, and thus the supply curve can shift to the right or left.

Which outcome describes the typical effect of government regulation?

• A. It adds to the cost of doing business, typically decreasing supply.

• B. It streamlines the conduct of business, typically increasing supply.

• C. It directly changes business costs, typically decreasing supply.

• D. It increases competitiveness and job creation, typically increasing supply.

Why was the law described in the excerpt not automatically effective at preventing cable companies from becoming larger?

• A. Companies can argue in court they face competition in that market from other technologies that provide television.

• B. Companies can continue to grow their market share until they reach the 30 percent limit.

• C. Companies are able to get past government regulations if they expand into new markets.

• D. Companies are colluding with one another to set prices in an oligopoly.