Unit 2 final review

What is a surplus in the context of market equilibrium?

• A situation where quantity demanded is greater than quantity supplied

• A situation where quantity supplied is greater than quantity demanded

• A situation where prices are below equilibrium

• A situation where quantity demanded equals quantity supplied

Which of the following is a determinant of supply?

• Cost of resources

• Number of buyers

• Consumer preferences

• Income levels

What happens to the market when there is excess demand?

• A shortage occurs

• Prices tend to decrease

• A surplus occurs

• Supply increases immediately

How do technological improvements affect supply?

• They increase production costs

• They lower production costs and increase supply

• They have no effect on supply

• They decrease profitability

What is the effect of a price ceiling?

• It increases the supply of goods

• It sets a maximum price below equilibrium

• It sets a minimum price above equilibrium

• It decreases the demand for goods

Which of the following describes elastic demand?

• Demand decreases as price decreases

• Demand is very sensitive to price changes

• Demand remains constant regardless of price changes

• Demand increases as price increases

What is the impact of a subsidy on supply?

• It increases the supply of a good

• It increases the demand for a good

• It has no effect on supply

• It decreases the supply of a good

What is the marginal product of labor?

• The total cost of labor

• The change in output from hiring one additional worker

• The cost of hiring one more worker

• The total output produced by all workers

What is the effect of an increase in the number of buyers in a market?

• A decrease in demand

• An increase in demand

• A decrease in supply

• No change in demand

When income increases the money spent on necessaries of life may not increase in the same proportion, This means

• 1. income elasticity of demand is zero

• 1. income elasticity of demand is one

• 1. income elasticity of demand is greater than one

• 1. income elasticity of demand is less than one