1.Which of these situations is most likely to lead to a decrease in the price of a good?

• Demand increases as fast as supply increases.
• Demand decreases and supply decreases the same amount.
• Demand increases and supply decreases.
• Demand decreases and supply remains the same.

2.Which economic concept helps explain the level of potato production?

• elasticity
• substitution
• fungibility
• non-excludability

3.Why is it possible to make money in the currency exchange market?

• Inflation always drives up the value of money.
• Exchange rates are always fluctuating.
• Governments always buy their own currencies.
• Some currencies are minted with precious metals.

4.Which does a company do in an initial public offering (IPO)?

• begins selling stock to the public
• gets taken over by the government
• enters into a new partnership
• offers a new line of products

5.Which is an example of a consumption tax?

• 30 tax per gallon of gasoline
• 9%tax on all sales
• 10%tax on gambling winnings
• 15%tax on profits from stock sales

6.A juice company falsely claims that its drinks reduce the incidence of heart attacks. Which practice, regulated by consumer protection laws, is this?

• predatory pricing
• bid rigging
• making misleading statements
• price fixing

7.What is the government trying to protect when it sets a price floor?

• a vulnerable industry
• low-income consumers
• international trade
• domestic workers