What is the role of incentives in economic choices?
Economics Unit II Quiz Study Guide

Quiz
•
Social Studies
•
12th Grade
•
Medium
Zachary Aument
Used 1+ times
FREE Resource
26 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
They have no impact on economic decisions.
They only discourage businesses from investing.
They can be positive or negative motivators that influence choices.
They always lead to increased pollution.
Answer explanation
Incentives play a crucial role in economic choices as they can motivate individuals and businesses positively or negatively, influencing their decisions and behaviors in the market.
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is a barrier to reaching equilibrium in the housing market?
Unlimited supply of affordable housing
Zoning restrictions and limited supply
Excessive demand for luxury homes
High interest rates on mortgages
Answer explanation
Zoning restrictions and limited supply hinder the availability of housing, preventing the market from reaching equilibrium. These regulations can limit new construction and reduce the overall housing stock.
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
According to the Law of Demand, what happens when prices rise?
The quantity demanded increases.
The quantity demanded falls.
The quantity supplied decreases.
The quantity supplied remains constant.
Answer explanation
According to the Law of Demand, when prices rise, consumers tend to buy less of a good, leading to a decrease in the quantity demanded. Therefore, the correct answer is that the quantity demanded falls.
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is an example of a factor affecting supply?
Consumer preferences
Income levels
Production costs
Future price expectations
Answer explanation
Production costs directly impact supply; if costs rise, producers may supply less. In contrast, consumer preferences and income levels affect demand, while future price expectations can influence both supply and demand.
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What occurs when supply exceeds demand in a market?
Equilibrium
Disequilibrium
Inflation
Deflation
Answer explanation
When supply exceeds demand, it leads to excess goods in the market, resulting in disequilibrium. This situation disrupts the balance between supply and demand, causing prices to adjust until equilibrium is restored.
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What does Price Elasticity of Demand measure?
How sensitive the quantity supplied is to a price change
How sensitive the quantity demanded is to a price change
The total revenue generated by a product
The cost of production for a good
Answer explanation
Price Elasticity of Demand measures how sensitive the quantity demanded is to a price change. A higher elasticity indicates that consumers will significantly change their demand in response to price fluctuations.
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which of the following is an example of an inelastic good?
Luxury cars
Designer clothes
Insulin
Smartphones
Answer explanation
Insulin is an inelastic good because it is a necessity for people with diabetes, meaning demand remains constant regardless of price changes. In contrast, luxury cars, designer clothes, and smartphones are elastic goods.
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