Unit 2 Study Guide Directions—Define the terms, answer the questions, and you will do great on the test. income effect elastic inferior good substitute subsidy supply schedule diminishing marginal returns marginal product of labor start-up costs deregulation patent price discrimination economies of scale monopoly complement marginal cost commodity When a consumer is able and willing to buy a good or service, he or she creates which of the following What determines the price and the quantity produced of most goods What are inferior goods What kind of system is the United States economy based on What kind of table lists the quantity of a good that a person will buy at different prices What kind of changes would be expected in the demand of a country that has a growing population When prices rise, what happens to your purchasing power if your income does not go up Demand for movie rentals is highly elastic. A video store that raises the price of a rental will Will, a sprinter on the track team, has inelastic demand for sports drinks. The local store has raised the price of a sports drink from $1.00 to $1.50. Which of the following could describe Will’s response to the price change What do sellers do if they expect the price of goods they have for sale to increase dramatically in the near future What happens when the supply of a nonperishable good is greater than the consumers demand Sunshine Island has three large supermarkets that supply most of the groceries for the island’s population. A gas station also sells a very small selection of groceries. How would you describe the market for groceries on Seaside Island In a monopoly market, the market quantity sold will be _____ the quantity sold in a perfectly competitive market. How does a natural monopoly function What is one kind of monopoly that the U.S. government generally permits What is it called when the government uses some tool other than money to allocate goods Give examples of inelastic goods Give examples of elastic goods