Unit 2 Study Guide Directions—Define the terms, answer the

Unit 2 Study Guide
Directions—Define the terms, answer the questions, and you will do great on the test.
income effect
inferior good
supply schedule
diminishing marginal returns
marginal product of labor
start-up costs
price discrimination
economies of scale
marginal cost
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