UNIT 2 TEST• EVERYONE must participate

– Send one at a time

• Answer the question on the board- you have 10 seconds to answer

• First to hit buzzer gets to answer for the bonus– If you get it wrong, simply put your board down- DON’T ERASE ANYTHING– If you get it right, hide your answers

• Red, blue and black- different bonus values

• No helpies (or you lose the point for cheating)

• You need 10 points for a passing grade

• Winner receives +5 extra credit

Demand for a good only exists when consumers are both ______

and ______ to buy it.

• Willing and able

What is the equation for calculating total revenue?

• Price x quantity

Milk and cookies are an example of ____________ goods.

• complementary

If elasticity is greater than 1.0, demand is considered _________

• elastic

Broad categories of goods have _________ demand where as specific brands have ________

demand.

• Inelastic and elastic

_______________ is the sum of individual demands of all consumers in the market.

• Market demand

____________ affect demand because when people anticipate changes in prices or supply, they

change their buying behavior.

• Consumer expectations

If there are more __________ goods available, demand is more

elastic.

• Substitutes

A decrease in the price of 1 complementary good will

_________ demand for the other.

• increase

If quantity demanded were to increase, the demand curve would

shift in which direction?

• To the right

If demand elasticity = 1.0, then demand is considered _________

• Unit elastic

The law of demand says that the lower the price is, the

___________ the quantity demanded.

• higher

What is the equation for calculating demand elasticity?

• Percentage of change in quantity divided by percentage of change in price

As substitute goods become cheaper, demand for the normal

good will ____________

• decrease

The highest price you are willing to pay for each additional unit of a

good is its ____________

• Marginal value

Demand for gasoline is __________ because it does not

respond to changes in price.

• inelastic

For suppliers to be willing to produce a good, they have to see

an opportunity for _______

• Profit

Joan Rivers’ cosmetic surgeries are becoming less and less effective and the

money she’s pouring into her youth is just not paying out anymore. This is an

example of which law?

• Law of diminishing return

_______________ is where supply and demand intersect.

• Market equilibrium

When resources become cheaper, quantity supplied will __________

• increase

• surplus

pric

e

quantity

Why is it bad for firms if there is a surplus of goods?

• Surplus = stuff that is going to waste or be sold at clearance prices

__________ refers to the quantity of goods a firm/producer is willing and able to sell at various prices.

• supply

_________ occurs when quantity supplied is lower than quantity

demanded.

• shortage

The law of supply states that the higher the price, the _________

the quantity supplied

• higher

________ among firms keeps prices relatively close to the

market clearing price

• competition

Gasoline and other exhaustible resources have a(n) __________

demand.

• inelastic

If demand is elastic, the total revenue of a business will

__________ if they reduce their prices

• increase

____________ refers to how quantity supplied and demanded

will change according to changes in price.

• elasticity

If demand elasticity is less than 1.0 is it considered _________

• inelastic

The price of markers have decreased from $15/pack to $8. The quantity demanded increased from 2,000 to 3,200. - calculate the elasticity- indicate whether it is elastic, unit elastic, or inelastic

• 1.28• elastic