Economics Unit Test Review

What occurs when supply and demand coordinate?

Why is pure competition considered an unsustainable system?

What is a possible result of disequilibrium?

Excess supply is created when price or ____ move away from the equilibrium point.

If supply for a product is low but demand is high, what most likely needs to happen to achieve equilibrium?

What will likely happen if the pie maker continues to make additional pies?

What will most likely happen if the pie maker bakes a seventh pie?

What is total revenue?

What is the best title for this diagram?

Why are utilities, such as electricity and water, examples of natural monopolies?

What is a chart that shows the connection between consumer demand and price?

In which way do producers try to differentiate themselves in monopolistic competition?

Who do producers hoping to earn profits supply goods and services to?

Both a demand curve and a demand schedule show how what affects consumer demand?

Supply and Demand

Equilibrium occurs when supply and demand balance to establish prices and production levels.
Excess demand is a possible outcome of disequilibrium, leading to shortages.

Market Structures

A monopoly is defined as a market with a single supplier for a good or service, limiting competition.
Natural monopolies, like utilities, arise when high production costs prevent effective market competition.

Competition Types

Pure competition is deemed unsustainable as continuous price reduction by producers can eliminate profits.
Monopolistic competition allows producers to differentiate themselves primarily through product features.

Production Insights

A marginal cost and marginal revenue analysis can indicate that as production continues (e.g., baking additional pies), marginal costs tend to rise while marginal revenue remains stable, reducing overall profit.
Producing at a point where supply is low and demand is high necessitates an increase in supply to reach equilibrium.

Revenue and Market Dynamics

Total revenue for a company is calculated as the sum received from selling all goods (e.g., computer parts by Motherboards, Inc.).
Demand schedules illustrate the relationship between consumer demand and pricing, showcasing how price changes affect demand.

Impact of Supply Factors

Supply can be influenced by various factors, visualized through structured diagrams highlighting these elements.
A movement away from equilibrium, either through price changes or quantity adjustments, can create excess supply.

Consumer Behavior

Producers aim to fulfill consumer needs by providing goods and services responsive to demand fluctuations.

This quiz focuses on fundamental concepts in economics, including supply and demand, monopolies, and competition. Review key terms and their definitions to prepare for your unit test. Perfect for students looking to deepen their understanding of market structures.