American Government/Economics Test 2 Supply and Demand and Business/Market Structures Study Guide Questions 1-15: Vocabulary/Matching Know the following terms: Price ceiling Liability Invisible hand Horizontal merger Supply Bond Partnership Stock Vertical merger Substitute goods Demand Corporation Price floor Surplus Dividends Equilibrium Shortage Complementary goods Sole proprietorship Multiple Choice Questions 16-41 During the paper chain activity what was the term for when marginal output decreased? What is the term for when there is a change in quantity demanded at every price? Computers and computer games are an example of what type of goods? Will supply or demand be affected first if there is a $5 tax on manufacturers? What is the effect of future price on current demand? What is a product example of inelastic demand where demand is not related to price? What will change first, if the price is increased, supply or demand? What is the relationship between quantity demanded, quantity supplied and price? Be able to identify equilibrium price in a chart. What is the effect of the invisible hand on a market that is in disequilibrium? What would be the effect on supply of a price ceiling? What business model has all partners sharing liability equally? What market structure has barriers to entry so high that it is virtually impossible to have new competition? What is an oligopoly? What does it mean for a product to have inelastic demand? In which market structure does a business have the least market power? What are the advantages enjoyed by corporations? What is meant by economy of scale? What is the most common business structure in the United States? What are the ways government can influence supply? What are the weaknesses of a sole proprietorship? What is monopolistic competition? What are inferior goods? Public utilities are an example of what type of monopoly? If a business fails and all of the owners lose everything, what type of business did they have? What are the strengths and weaknesses of a business partnership? Fill in the Blank Questions 42-50 The primary difference between perfect competition and monopolistic competition is the type of product; in monopolistic competition the product is ___. A business owned and managed by a single individual is called a ___. In 1993, the demand for Jack in the Box food suddenly and drastically decreased when 3 children died from of e. coli poisoning after eating Jack in the Box hamburgers. The reason for this sudden decrease in demand is that there was a change in ___. If a lot of people move into Idaho from California, the demand for houses will ___ because of ___. One way to know if a company is part of a monopoly market structure is if the product they sell is ___. If a market is in equilibrium and supply increases, the price of the good must ___ in order for the market to return to equilibrium. In a monopoly, the company has almost total control over the price of their product. What is the only thing that limits a monopoly's control over price? If the rent on commercial buildings increases, supply will decrease because of ___. Who owns a corporation?