______ 1. The "Law of Demand" states that:

a. As supplies go up, the number of customers will go down.

b. As prices go up, the quantity purchased will go down.

c. As demand goes up, the number of customers will go down.

d. As prices go up, the quantity purchased will go up.

______ 2. The Law of Demand shows:

a. An inverse relationship between price and quantity demanded

b. A direct relationship between price and quantity demanded

c. No relationship between price and quantity demanded

d. A complementary relationship between price and quantity demanded

______ 3. Which drawing below shows a correct Demand Curve:

a. b. c.

.

______ 4. Economists describe the principle that consumers usually get less and less satisfaction from each unit of the same product that they purchase as:

a. Diminishing marginal utility

b. Scarcity

c. Factors of Production

d. Capital carryover

______ 5. It is a good idea to have a written business plan when starting a business because:

a. It forces the prospective business owner to consider critical issues

b. Lenders will require a written business plan for loans and credit cards

c. It helps the entrepreneur figure out how to achieve their goals

d. All of the above

______ 6. As shown on a Demand Curve, what is the only thing that can cause a change in the Quantity Demanded (movement along the curve)?

a. A change in the economy

b. A change in suppliers

c. A change in price

d. A change in stores

______ 7. If other factors change while the price stays the same, a Demand Curve may:

a. Shift left or right, showing a change in demand at all price levels

b. Become a Supply Curve

c. Disappear

d. Result in a recession

______ 8. Once the weather starts cooling off in the autumn, clothing stores can sell more coats than they do in the summer, even though the price has not changed. This is an example of the factor called:

a. Substitutes

b. Complements

c. Consumer Taste

d. Number of Producers

______ 9. If more customers enter the market because the population in the area is growing:

a. Prices go down, and Producers make more money

b. Market demand increases, and the Demand Curve shifts to the right

c. Quantities go down, so prices go down

d. Market demand decreases, and the Demand Curve shifts to the left

______ 10. Weather forecasters warn that a hurricane is coming, so demand for bottled water goes up. How will the Demand Curve for bottled water change?

a. b. c.

______ 11. The price of peanut butter falls. What is likely to happen to the Demand Curves for jelly and bread?

a. They will shift to the right because of Expectations.

b. They will shift to the left because they are Substitutes

c. They will shift to the left because of Consumer Tastes

d. They will shift to the right because they are Complements.

______ 12. Which Demand Curve is More Elastic?

A. B.

______ 13. Which is most likely to have an Inelastic Demand?

a. A snack food

b. Red socks

c. A necessary medication

d. A generic brand of mechanical pencils

______ 14. Which type of interest adds up more quickly?

a. Simple interest

b. Annual interest

c. Compound interest

d. It's all the same

______ 15. Which drawing below shows a correct Supply Curve?

a. b. c.

______ 16. The "Law of Supply" states that:

a. As prices for an item go up, less of that item will be offered for sale.

b. As supplies go up, prices go up.

c. As prices for an item go up, more of that item will be offered for sale

d. As demand goes down, prices go up.

______ 17. Supply Elasticity measures:

a. How much people need the product

b. The responsiveness of the quantity supplied to changes in price

c. How emotionally attached producers are to supplying the product

d. The expectations consumers have about the future

______ 18. The main factor in determining elasticity of Supply is:

a. How fast the producer can change what they are producing

b. How much consumers need the products

c. The Law of Demand

d. All of the above

______ 19. Which is likely to have the most Elastic Supply Curve:

a. New antibiotics introduced to replace ones that bacteria are resistant to

b. A change from beet sugar to cane sugar in breakfast bars

c. New water heater systems that have to be installed in a totally different way

d. A change from the use of fossil fuels to hydrothermal fuels for power plants

______ 20. If the cost of aluminum goes up, what will happen to the Supply Curve for products made with aluminum?

a. It will shift to the right

b. It will shift to the left

c. It will stay in the same place

d. No one knows what will happen

______ 21. Monica wants to sell flowers in a booth at the Flea Market. She will grow the flowers on her own property and make them into arrangements to sell. She will not have any employees and is not worried about liability. She wants to keep everything as simple as possible. What type of business organization would make sense for her?

a. Corporation

b. Sole Proprietorship

c. Non-Profit Corporation

d. Limited Liability Company

______ 22. Several new factories begin producing cell phones. What will happen?

a. There will be more cell phones produced, and the Supply Curve will shift left

b. There will be more cell phones produced, and the Supply Curve will shift right

c. No Change in the Supply Curve

d. There will be fewer cell phones produced, and the Supply Curve will shift left

______ 23. A high credit score may help you:

a. Get loans at better rates

b. Have more options for jobs and rental housing

c. Have an easier time getting utilities hooked up

d. All of the above

______ 24. Your Credit History:

a. Is secret - you aren't allowed to see it

b. Only contains the information you give to the Credit Bureau

c. Contains information on almost every financial transaction you have made,

including whether you pay your bills on time

d. Only covers the last three months

______ 25. If you find a mistake in your Credit History:

a. You can write the credit bureau and ask them to fix it

b. You'll never know, because it's secret

c. There's nothing you can be done bout it

d. The government will find it and correct it for you

Matching (2 points each):

_____ 26. Utility A. Measures the extent to which a change in price causes a

change in the quantity demanded

_____ 27. Income Effect B. Amount of a product that someone is willing and able to

purchase at a range of prices at one point in time

_____ 28. Demand Elasticity C. The usefulness or satisfaction a consumer gets from a

product

_____ 29. Demand D. The amount of a product a producer or seller is willing

to offer for sale at a price at a given point in time

_____ 30. Supply E. The fact that if prices drop, consumers have more

income to spend, so they purchase more