Final Exam Study Guide Part 3

The diagram commonly used to explain the real flow of goods and services, resources, and money in an economy is called a (a)  

• Circular flow diagram
• Bar graph
• Pie chart
• Scatter plot

What does the circular flow diagram illustrate in microeconomics?

• The real flow of goods, services, resources, and money

• The growth of population

• The change in weather patterns

• The structure of DNA

Which market is involved in the exchange of goods and services in the circular flow model?

• Product market

• Stock market

• Labor market

• Black market

What is the law of demand?

• As price decreases, quantity demanded increases

• As price increases, quantity demanded increases

• As supply increases, price increases

• As demand increases, supply decreases

What is the law of supply?

• As price increases, quantity supplied increases

• As price decreases, quantity supplied increases

• As demand increases, supply decreases

• As supply increases, demand decreases

Which of the following is a determinant (shifter) of supply?

• Advancements in production methods

• Number of buyers

• Cost of items not related to the product

• Technology

• Population size affecting demand

• Consumer tastes

• Preferences of individuals

• Price of unrelated goods

What happens when prices are set too high, such as with price floors?

• Surpluses are created

• Shortages are created

• Equilibrium is reached

• Demand increases

Setting prices too low, such as with price ceilings, results in (a)  

• Shortages are created
• Surpluses are created
• Prices stabilize
• Supply increases

Which of the following is NOT a form of business organization?

• Monopoly

• Sole proprietorship

• Partnership

• Corporation

Which business organization is characterized by a single owner?

• Sole proprietorship

• Partnership

• Corporation

• Oligopoly