Name_______________________________ Period__________ Date_____________________
Unit 2 Review WS:
1. Companies such as Crest and Colgate (and many other toothpaste producers make
products that are slightly differentiated (a little different). There are few barriers to entry
(Hey, with a few bucks you can make your own toothpaste) and these companies have little
control over price (you may prefer Crest, but if Crest was three times as expensive, I bet you’d
buy Colgate!). Therefore, the toothpaste industry is what kind of market structure?
2. What market structure has only one seller, very high barriers to entry, and a lot of control
over the prices they charge (…think Rockefeller and Carnegie)?
3. Producers of wheat, corn, and tomatoes fall into this market structure…
4. When quantity supplied is exactly equal to quantity demanded, it means that sellers and
buyers have “agreed” on a price. In other words, sellers will provide exactly the amount that
buyers are willing to sell. We call this point on the supply and demand graph the
____________ price.
5. The Law of _____________ states that if the price of pizza decreases, I will buy more pizza.
6. I own a restaurant that makes hamburgers, hot dogs, and turkey sandwiches. If it costs me
the same to make one of each and people are willing to pay more for turkey sandwiches than
the other options, I should produce more _______________________ because the Law of
_________________ states that as price (meaning what people are willing to pay) increases,
the quantity _______________ increases.
7. Does the chart below show a price floor or a price ceiling?
8. Sales tax is an example of what kind of tax (circle the correct answer)?
Progressive, Proportional, Flat, or Regressive
9. Chips and salsa are an example of __________________ products. Therefore, if the price of
chips increases, the demand for salsa will ___________________.
10. 7-Up and Sprite are an example of _____________________ products. Therefore, if the
price of 7-up increases, the demand for Sprite will ____________________.
11. What kind of income tax do we have in the United States (circle the correct answer)?
Progressive, Proportional, Flat, or Regressive
12. Define the law of Demand…
13. Define the Law of Supply…
14. What happens in the Product Market of the Circular Flow Diagram?
15. What happens in the Factor Market of the Circular Flow Diagram?
16. On the supply and demand graph, which curve has shifted and did it increase or decrease
if price decreases and quantity increases?
17. On the supply and demand graph, which curve has shifted and did it increase or decrease
if price Increases and quantity increases?
18. If quantity demanded is greater than quantity supplied, a ___________ has been created.
19. If quantity supplied is greater than quantity demanded, a ___________ has been created.
20. Which of the following would have the highest INELASTICITY of supply?
A. Life-Saving medication
B. Bananas
C. Computers
D. Automobiles
REVIEW FOR PART 2 of TEST:
21. Show what would happen on the supply and demand curve for apples if it is discovered
that apples cure cancer:
22. Show what would happen on the supply and demand curve for automobiles if the price of
metal (used in making cars) increases:
23. Show what would happen on the supply and demand curve for Product A if the price of
product B (a substitute) increased?