Unit 2 Economics Test – Questions & Complete Answers
In economics, the concept of demand is defined as the desire to own
something Correct Ans - combined with the ability to pay for it
according to the law of demand, when the price of pizza goes up
Correct Ans - consumers will buy less pizza
Marty just finished creating a market demand schedule for his hardware
store. Which of the following is he most likely trying to determine?
Correct Ans - How many tools are sold to all consumers in the market at
various prices
Juanita has noticed that the price of bagels has gone up. Because of this, she
has decided to buy a less expensive yogurt for her breakfast. This is an
example of the Correct Ans - substitution effect
If Tino responds to a sharp increase in his transportation costs by buying
fewer clothes, he is demonstrating Correct Ans - the income effect
"Ceteris paribus" means demand will change when price changes
Correct Ans - If other market factors remain constant
In general, a decrease in consumer income will have what effect on demand
for normal goods? Correct Ans - It will cause demand to fall
The increasing age of the American population is an example of how
Correct Ans - changing demographics can cause demand shifts
Which of the following is the best example of substitute for movie tickets?
Correct Ans - Rentals of on-demand programming
A change in demand for one good will have what effect on its complement?
Correct Ans - the same effect
Shana continues to buy a necessary medicine even though prices for the
medicine rise sharply. Shana's behavior shows how Correct Ans -
demand for necessities is inelastic
, Suppose demand for a product is highly elastic. What will likely happen to a
company's total revenue if it raises the price of that product? Correct
Ans - Total revenue will fall
Suppose the price of a good rises. In general, how does the percentage of
your budget you spend on that good affect the elasticity of your demand for
goods overall? Correct Ans - The higher the percentage of your
budget a good represents, the more elastic your overall demand
Why does demand generally become more elastic over time? Correct
Ans - People have time to find substitutes and change behaviors
Do higher prices lead to increased revenues for a company? Correct
Ans - Sometimes
The law of supply declares which of the following? Correct Ans -
Supply falls as price falls
What does a firm's supply schedule show? Correct Ans - How price
changes affect supply for a market
Which of the following typically happens as prices for a good or service
rises? Correct Ans - More suppliers enter the market
What does it mean to say that supply is unitary elastic? Correct Ans -
The percentage change in price and in supply are the same
Consider each of these business activities. For which do you think supply
would be the most elastic in the short term? Correct Ans - Baking
cupcakes
Which of the following would be an example of a fixed cost on a farm?
Correct Ans - Mortgage on the land
To increase marginal return, a company might consider Correct Ans -
Purchasing more machinery
In economics, the concept of demand is defined as the desire to own
something Correct Ans - combined with the ability to pay for it
according to the law of demand, when the price of pizza goes up
Correct Ans - consumers will buy less pizza
Marty just finished creating a market demand schedule for his hardware
store. Which of the following is he most likely trying to determine?
Correct Ans - How many tools are sold to all consumers in the market at
various prices
Juanita has noticed that the price of bagels has gone up. Because of this, she
has decided to buy a less expensive yogurt for her breakfast. This is an
example of the Correct Ans - substitution effect
If Tino responds to a sharp increase in his transportation costs by buying
fewer clothes, he is demonstrating Correct Ans - the income effect
"Ceteris paribus" means demand will change when price changes
Correct Ans - If other market factors remain constant
In general, a decrease in consumer income will have what effect on demand
for normal goods? Correct Ans - It will cause demand to fall
The increasing age of the American population is an example of how
Correct Ans - changing demographics can cause demand shifts
Which of the following is the best example of substitute for movie tickets?
Correct Ans - Rentals of on-demand programming
A change in demand for one good will have what effect on its complement?
Correct Ans - the same effect
Shana continues to buy a necessary medicine even though prices for the
medicine rise sharply. Shana's behavior shows how Correct Ans -
demand for necessities is inelastic
, Suppose demand for a product is highly elastic. What will likely happen to a
company's total revenue if it raises the price of that product? Correct
Ans - Total revenue will fall
Suppose the price of a good rises. In general, how does the percentage of
your budget you spend on that good affect the elasticity of your demand for
goods overall? Correct Ans - The higher the percentage of your
budget a good represents, the more elastic your overall demand
Why does demand generally become more elastic over time? Correct
Ans - People have time to find substitutes and change behaviors
Do higher prices lead to increased revenues for a company? Correct
Ans - Sometimes
The law of supply declares which of the following? Correct Ans -
Supply falls as price falls
What does a firm's supply schedule show? Correct Ans - How price
changes affect supply for a market
Which of the following typically happens as prices for a good or service
rises? Correct Ans - More suppliers enter the market
What does it mean to say that supply is unitary elastic? Correct Ans -
The percentage change in price and in supply are the same
Consider each of these business activities. For which do you think supply
would be the most elastic in the short term? Correct Ans - Baking
cupcakes
Which of the following would be an example of a fixed cost on a farm?
Correct Ans - Mortgage on the land
To increase marginal return, a company might consider Correct Ans -
Purchasing more machinery
