Economics Test 1 Study Guide (Chapter 1-3)
Short Answer (2 points each)
1.
2.
3.
4.
Economics is the science of _____________________?
Define the term, “Insatiability” ______________________________________________.
When Insatiability and ______________ combine, choices become necessary.
When a good or service becomes more desirable and scarce, what happens to its
economic cost? _________________________________
5. Any tangible thing that has a measurable life span is known as a __________________.
6. Intangible items such as Mr. McCorkle’s teaching are known as __________________.
7. Toxic waste, garbage, and sewage are all examples of ___________________________.
8. A good with a price tag of zero is known as a _______________ good.
9. This principle holds that the worth of everything is determined by its usefulness to the
buyer: _______________________________________.
10. The satisfaction that a person receives from a choice is known as the
____________________________________.
11. The satisfaction that a person gives up by not choosing what was second best is known as
____________________________________.
12. This type of economics concerns itself with choices made on the individual level
______________________________________.
13. This type of economics concerns itself with choices made on a large-scale level
______________________________________.
14. This principle states that people tend to receive less and less satisfaction from any good
or service as they obtain more and more of it during a specific period of time. (Remember
the Yum-Yum bars) _______________________________________________________
15. Give at least one function of prices.
__________________________________________________________________
16. This law states that when everything else is held constant, the lower the price charged for
a good or service, the greater the quantity of people will demand it.
_______________________________________________________________________
17. When a demand/supply curve shifts to the right, the product is experiencing a
_________________ in demand/supply.
18. When a demand/supply curve shifts to the left, the product is experiencing a
_________________ in demand/supply.
19. Name one thing that may cause a change in demand when the price stays the same.
_______________________________________________________________________
20. If demand increases for a good because the buyer’s income increases, this good is known
as a ________________ good.
21. If demand declines as the buyer’s income increases, this good is known as a
________________________ good.
22. If the price of beef were to increase, what would happen to the demand of chicken?
_______________________________________________________________________
23. Goods that are purchased or used together are known as
__________________________________________.
24. If the price of Peanut Butter were to increase drastically, what would happen to the
demand of Jelly even though the price of Jelly stayed the same?
_____________________________________________________________________
25. If you received word that the price of Orange Juice was about to go up from $1.25 a can
to $3.25 a can, what would happen to the short-term demand of Orange Juice? Longterm? _________________________________________________________________
26. What law states that the higher the price buyers are willing to pay, the greater the
quantity of product a supplier will produce?
______________________________________________________________________
27. Name one thing that may cause a change in supply when the price stays the same:
______________________________________________________________________
28. The intersection point where supply and demand curves meet which represents the price
where the amount demanded equals the amount supplied is known as
______________________________________________________________________
29. An excess of unsold products is called a _______________________
30. When quantity demanded is less than quantity supplied, it results in a
__________________________
Graphs (10 Points Each)
Increase in Demand
Shortage
Decrease in Supply
Surplus