Economics: Today and Tomorrow © 2012

Chapter 7: Demand and Supply

Demand and Supply

1
Which economic rule states that the additional satisfaction people get from consuming one more unit of a product will lessen with each additional unit they consume?
A)Real income effect
B)Law of diminishing marginal utility
C)Law of demand
D)Substitution effect
2
Which of the following is defined as the ability of any good or service to satisfy consumer wants?
A)Demand
B)Supply
C)Real income effect
D)Utility
3
The amount of additional satisfaction gained from eating one more ice cream cone is known as _____.
A)income effect
B)marginal utility
C)substitution effect
D)quantity demanded
4
If two products are complementary goods, how will a decrease in the price of one affect the other?
A)Demand will increase.
B)Price will increase.
C)Demand will decrease.
D)Price will decrease.
5
Which of the following is defined as a situation in which a product's price change has little impact on the quantity demanded by consumers?
A)Demand schedule
B)Demand curve
C)Elastic demand
D)Inelastic demand
6
The law of diminishing returns states that after a certain point, _____.
A)prices will not keep up with quantity supplied
B)workers will be unable to expand productivity
C)output will fall
D)increases in output will not keep pace with increases in labor or machinery
7
A line that graphically shows the quantities supplied at each possible price is called _____.
A)the Law of Supply
B)the quantity supplied
C)a supply schedule
D)a supply curve
8
_____ is a table showing quantities supplied at different prices.
A)The Law of Supply
B)The quantity supplied
C)A supply schedule
D)A supply curve
9
When a market economy operates without restriction, it _____.
A)creates shortages
B)creates surpluses
C)raises prices
D)eliminates shortage and surpluses
10
Which of the following is defined as the distribution of goods and services based on something other than price?
A)Equilibrium
B)Shortage
C)Surplus
D)Rationing
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