Economics CSA #2

The idea that suggests as price increases, the amount of goods/services purchased decreases in known as the Law of:

• Demand

• Supply

• Diminishing Marginal Utility

• Elasticity

In our American free enterprise system, the market price is determined by

• Government distribution of goods and services in the marketplace.

• Demand for goods and services.

• The interaction of the forces of supply and demand

• What is available for producers to supply.

The idea suggesting that a change in inputs of production leads to a change in output is the:

• Principle of Diminishing Marginal Utility

• Law of Variable Proportions

• Law of Diminishing Returns

• Elasticity

This economic concept states that as people consume more and more units of a product, they become less eager to acquire additional units.

• Principle of Diminishing Marginal Utility

• Law of Variable Proportions

• Law of Diminishing Returns

• Elasticity

This economic idea shows the point that additional units of input may add less and less to total output is known as:

• Principle of Diminishing Marginal Utility

• Law of Variable Returns

• Law of Diminishing Returns

• Elasticity

Which best describes the Law of Supply:

• Sellers will offer more goods at a higher price than a lower price

• Buyers will purchase more at lower prices than higher prices

• Price changes will have little effect on the demand of the product

• Buyers will purchase more at higher prices if the good is scarce

The reason why businesses would offer "deals" on purchases of a larger quantity of a good demonstrates which economic concept?

• A. Principle of Diminishing Marginal Utility

• B. Law of Variable Proportions

• C. Law of Diminishing Returns

• D. Elasticity

According to the Law of Supply and Demand, all else being equal, if production for TVs doubled in a given year, which of the following would result?

• The demand for TVs would fall

• The price for TVs would rise

• The price for TVs would fall

• The demand would not change

Because farmers naturally do not follow the Law of Supply when prices fall, what must happen to correct the market situation?

• Farmers must produce twice as much of their crop the following year

• The government intervenes and pays farmers not to produce

• Other businesses must step up and produce more agricultural products

• None of the above

If a good has few, if any, substitutes then demand is likely:

• Elastic

• Inelastic