Wk 1 Practice Ch 3, Demand, Supply, and Market Equilibrium

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Question #1

Government may place legal limits on prices when it is determined that prices are unfairly _______
(high/low) for buyers or unfairly _______ (high/low) for sellers.

A high… high…

B low… high…

C low… low…

D high… low…

Question #2

Price controls or ______ mandated in the apartment rental market benefit the consumer by establishing a price ______ the free market equilibrium price.

A ceilings; above

B ceilings; below

C floor; below

D floor; greater

Question #3

The effects on equilibrium price and quantity due to an increase in supply and a simultaneous decrease in demand are shown by
_____.

A a decrease in equilibrium price and an indeterminate change in equilibrium quantity

B an increase in equilibrium price and quantity

C an indeterminate change in equilibrium price and indeterminate change in equilibrium quantity

D an indeterminate change in equilibrium price and an increase in equilibrium quantity

Question #4

A price ceiling is the maximum legal price a seller may charge for a product or service where a price at or below the ceiling is ______ and a price above the price ceiling is ______.

A legal; legal

B legal; illegal

C illegal; legal

D illegal; illegal

Question #5

In which of the following situations do governments intervene to prevent prices from rising above or falling below their equilibrium levels?

A Prices are too low for firms. Prices are too high for consumers.

B Prices are too low for consumers. Prices are too high for firms.

C Prices are too low for consumers. Prices are too low for firms.

D Prices are too high for consumers. Prices are too high for firms.

Question #6

Which of the following shows the effects on equilibrium price and quantity due to an increase in supply and a simultaneous decrease in demand?

A The change in equilibrium price is indeterminate and equilibrium quantity rises.

B Equilibrium price rises and the change in equilibrium quantity is indeterminate.

C Equilibrium price falls and the change in equilibrium quantity is indeterminate.

D The change in equilibrium price is indeterminate and equilibrium quantity falls.

Question #7

A decrease in supply while holding demand constant results in a(n) ______ in equilibrium price, and a(n) ______ in equilibrium quantity.

A increase; decrease

B increase; increase

C decrease; increase

D decrease; decrease

Question #8

The production of a good or service in the least costly way is known as ______ efficiency.

A price

B expenditure

C allocative

D productive

E cost

Question #9

______,while holding demand constant, results in an increase in the equilibrium price of the good, but a decrease in the equilibrium quantity of the good.

A An increase in the supply of a good

B An unchanged supply of a good

C A decrease in the supply of a good

D A rightward shift of the supply curve of a good

Question #10

A decrease in demand while holding supply constant results in ______ in both equilibrium price and quantity.

A an increase

B a decline followed by an increase

C no change

D a decline

Question #11

The ability of the competitive forces of supply and demand to establish a price at which selling and buying decisions are consistent is called ______.

A the rationing function of prices

B equilibrium price

C equilibrium allocation

D perfect pricing

Question #12

Competition among corn producers forces them to use the best technology and right mix of productive resources; otherwise their costs will be too high relative to the market price and they will be unprofitable. This is best described as ______.

A the law of supply

B productive efficiency

C investment in physical capital goods

D energy efficiency

E substitution in production

Question #13

The equilibrium price where the quantity demanded equals the quantity supplied is otherwise known as the _____ -clearing price.

A production

B market

C selling

Question #14

On a simple supply model, a change in quantity supplied is illustrated by a ______ and a change in supply is illustrated by a ______.

A shift of the supply curve; movement along the supply curve

B movement along the supply curve; shift of the supply curve

C shift of the demand curve; shift of the supply curve

Question #15

The rationing function of prices refers to the ability of the competitive forces of supply and demand to establish a price at which ______.

A buying and selling decisions are inconsistent

B buying, but not selling, decisions are consistent

C selling, but not buying, decisions are consistent

D buying and selling decisions are consistent

Question #16

What is the price where the intentions of buyers and sellers match?

A The surplus price

B The equilibrium price

C The inferior price

D The equilibrium quantity

Question #17

The interaction between buyers and sellers determines the equilibrium price and the _____ quantity.

A supplied

B equilibrium

C demanded

Question #18

Choose all of the following that will cause a change in supply, not quantity supplied.

A Product price, Number of sellers, Consumer expectations

B Product price, Producer expectations, Consumer expectations

C Producer expectations, Technology, Number of sellers

Question #19

Resource costs or changes in these costs to production are responsible for shifts in the supply curve.

A True

B False

Question #20

The determinants of the supply of a good are any factors other than the product’s ______ that cause the supply curve of the good to shift.

A cost

B price

Question #21

What determines market price and equilibrium output in a market?

A Input prices

B The interaction of buyers and sellers

C Quantity demanded

D The number of sellers in a market

E Quantity supplied

Question #22

A change in ______, rather than a change in the quantity supplied, means a change in the schedule or a shift of the supply curve.

A demand

B supply

Question #23

If costs of production rise, the producer has an incentive to produce _____

A less

B more

Question #24

Which of the following are determinants of supply?

A Consumer expectations, Resource prices

B Taxes and subsidies, Technology, Resource prices

C Taxes and subsidies, Consumer expectations, Resource prices

Question #25

When drawing a supply curve, _____ is labeled on the vertical axis.

A cost

B price

C product

D quantity

Question #26

In general, a firm will (increase/decrease) the output of a good or service if the price of the good is rising.

A decrease

B increase

Question #27

Which of the following has the greatest effect on the quantity supplied?

A Positive technological changes

B Tastes and preferences

C Price

D Cost

Question #28

The supply curve measures quantity ______ on the horizontal axis and ______ on the vertical axis.

A price; supplied

B price; demanded

C demanded; price

D supplied; price

Question #29

The supply curve illustrates the relationship between ______.

A price and quantity supplied

B cost and price

C product and quantity supplied

D price and quantity demanded

Question #30

According to the law of supply, price and quantity supplied have a(n) ______ relationship.

A inverse

B negative

C exponential

D direct

Question #31

Market _____ is a schedule or curve showing the various amounts of a product that producers are willing and able to make available for sale at each possible price during a specific period.

A demand

B indicators

C supply

Question #32

A change in the number of buyers is a determinant of market ________

A equilibrium

B supply

C demand

Question #33

Which of the following are determinants of demand?

A Prices of related goods, Corporate taxes and subsidies, Consumer expectations, Number of buyers, Resource prices

B Corporate taxes and subsidies, Consumer expectations, Number of buyers, Resource prices

C Corporate taxes and subsidies, Consumer expectations, Number of buyers, Resource prices, Consumer income

D Consumer tastes, Consumer expectations, Number of buyers, Consumer income, Prices of related goods

Question #34

Which of the following is likely to cause an increase in the demand for a good or service?

A An increase in the number of buyers

B An increase in the number of sellers

C An increase in the price of a complementary good

D An increase in income and the good is inferior

Question #35

All the following are the determinants of demand except ______.

A price of substitutes in production

B consumers’ incomes

C the prices of related goods

D consumer expectations

E consumer tastes

Question #36

The inverse relationship between price and quantity demanded can be graphically illustrated by ______.

A a vertical line

B an upward sloping curve

C a downward sloping curve

D a horizontal line

Question #37

According to the law of demand, which of the following statements are true, all other things being equal?

A As price decreases, quantity demanded decreases. As price increases, quantity demanded increases.

B As price decreases, quantity demanded decreases. As price increases, quantity demanded increases.

C As price increases, quantity demanded decreases. As price decreases, quantity demanded increases.

Question #38

Which of the following specifically refers to demand?

A The seller side of any market

B Both the buyer and seller sides of any market

C The buyer side of any market

D The producer side of any market

Question #39

Which of the following are the characteristics of a competitive market?

A A large number of buyers but a small number of sellers. Standardized products

B Standardized products. A large number of buyers and sellers.

C A large number of buyers but a small number of sellers. A surplus of a narrow range of products

D A large number of buyers and sellers. A surplus of a narrow range of products

Question #40

A ______ the demand curve represents a change in demand while a ______ the demand curve represents a change in the quantity demanded.

A movement along; shift of

B rotation of; shift of

C rotation of; movement along

D shift of; movement along

Question #41

A demand curve shows the ______.

A positive relationship between price and quantity supplied for a product

B positive relationship between price and quantity demanded for a product

C inverse relationship between price and quantity demanded for a product

D inverse relationship between price and quantity supplied for a product

Question #42

A price at or above the price floor is illegal.

A False

B True

Question #43

The relationship between the price of a good or service and the quantity demanded of that good or service described by the law of demand is _____.

A direct

B negative

C equal

D positive

Question #44

The concept of demand can be summarized by a schedule or curve showing the quantity of a product that would be ______.

A given away at only one price

B consumed at various possible prices

C produced at various possible prices

D subsidized at various possible prices

Question #45

All competitive markets involve which of the following?

A Supply, Price, Government regulators

B Government regulators, Price, Demand, Quantity

C Supply, Government regulators, Price, Demand

D Supply, Price, Demand, Quantity

Question #46

A change in demand is represented by a ______ the demand curve while a change in quantity demanded is represented by a _______ the demand curve.

A movement along; shift of

B shift of; shift of

C shift of; movement along

D movement along; movement along

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Wk 1 Practice Ch 3, Demand, Supply, and Market Equilibrium

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