Unit 2 Test Review Game 1.

1. What is the study of the economic behavior and decision making of small units such as individuals, families, and firms? microeconomics 2. In the circular flow model, where would labor be bought and sold? factor market 3. What is an alternative sacrificed when a choice is made? trade-off 4. In the circular flow model, where are goods and services bought and sold? product market 5. What term describes society is getting the most it can from its scarce resources? efficiency 6. What term describes too few resources to satisfy society's desires? scarcity 7. What are the resources used to make goods and services? factors of production 8. Which characteristic of a market economy resolves surpluses and shortages? price flexibility 9. What states that consumers will buy less of a good as the price increases? the law of demand 10. What is the value of the best alternative given up when a choice is made? opportunity cost 11. In the circular flow model, who acts as buyers in the product market? households 12. What are the 3 key economic questions? What to produce?, How to produce? For whom to produce? 13. What is a maximum price that can be charged? price ceiling 14. An increase in the price of one product causes a decrease in the demand for another product. What can be concluded about the products? They are complements 15. What is it called when quantity supplied is greater than quantity demanded? surplus 16. In the circular flow model, who provides resources to the factor market? households 17. When buyers purchase the same amount of a product as a business is willing to sell, what condition has been reached? equilibrium There are 3 types of demand elasticity: elastic inelastic unit

18. If the price of a product decreases and consumers buy more, what type of demand does that product have? elastic 19. If a product has lots of substitutes, what type of demand does that product have? elastic 20. In the circular flow model, where do households act as sellers? factor market 21. If a product is a necessity, what type of demand does that product have? inelastic 22. An increase in the price of one product causes an increase in the demand for another product. What can be concluded about the products? They are substitutes 23. If a price increase of a product causes total revenue to increase, what type of demand does that product have? inelastic 24. If people continue to buy a product despite a price increase, what type of demand does that product have? inelastic 25. What is it called when quantity demanded is greater than quantity supplied? Shortage 26. What is a change in the quantity of a product purchased in response to a change in price? a change in quantity demanded 27. A popular athlete does a commercial for the Alphabet Corporation endorsing Product A causing sales to increase. What explains this action? Change in Demand 28. What will happen to the supply of Product A if the cost of one of its inputs goes up? Supply will decrease 29. What would happen to the equilibrium price and the equilibrium quantity of a product if the supply decreases? The equilibrium price increase and the equilibrium quantity decreases 30. The price of PRODUCT A decreases and the Alphabet Corporation puts less out. What explains this action? Change in Quantity Supplied 31. What would happen to the equilibrium price and the equilibrium quantity of PRODUCT A if demand increases? The equilibrium price and the equilibrium quantity increases 32. What would happen to the equilibrium price and the equilibrium quantity of PRODUCT A if supply increases? The equilibrium price decreases and the equilibrium quantity increases 33. What would happen to the equilibrium price and the equilibrium quantity of PRODUCT A if the number of sellers of PRODUCT A decrease? The equilibrium price increase and the equilibrium quantity decreases

34. What would happen to the supply of PRODUCT A if the technology for producing PRODUCT A improves? SUPPLY INCREASES 35. What would happen to the equilibrium price and the equilibrium quantity of PRODUCT A if technology for producing PRODUCT A improves? The equilibrium price decreases and the equilibrium quantity increases 36. What causes movement along the supply curve? a change in price 37. Which of the following is signified by a shift of the supply curve? Change in Supply