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 low… high…

B high… 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 floor; below

C ceilings; 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 an increase in equilibrium price and quantity

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

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

D a decrease in equilibrium price and an indeterminate change 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 illegal; illegal

C legal; illegal

D illegal; legal

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 consumers. Prices are too low for firms.

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

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

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 falls.

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

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

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

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 decrease; increase

C decrease; decrease

D increase; increase

Question #8

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

A productive

B price

C allocative

D cost

E expenditure

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 A decrease in the supply of a good

B A rightward shift of the supply curve of a good

C An increase in the supply of a good

D An unchanged supply of a good

Question #10

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

A a decline

B an increase

C no change

D a decline followed by an increase

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 perfect pricing

C equilibrium allocation

D equilibrium price

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 energy efficiency

D investment in physical capital goods

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 selling

B production

C market

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 selling, but not buying, decisions are consistent

B buying and selling decisions are consistent

C buying, but not selling, decisions are consistent

D buying and selling decisions are inconsistent

Question #16

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

A The surplus price

B The equilibrium quantity

C The equilibrium price

D The inferior price

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 Producer expectations, Technology, Number of sellers

C Product price, Producer expectations, Consumer expectations

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 price

B cost

Question #21

What determines market price and equilibrium output in a market?

A The interaction of buyers and sellers

B Quantity demanded

C Quantity supplied

D Input prices

E The number of sellers in a market

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 supply

B demand

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 Taxes and subsidies, Consumer expectations, Resource prices

B Consumer expectations, Resource prices

C Taxes and subsidies, Technology, Resource prices

Question #25

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

A price

B cost

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 increase

B decrease

Question #27

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

A Price

B Cost

C Tastes and preferences

D Positive technological changes

Question #28

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

A demanded; price

B price; demanded

C price; supplied

D supplied; price

Question #29

The supply curve illustrates the relationship between ______.

A price and quantity demanded

B price and quantity supplied

C cost and price

D product and quantity supplied

Question #30

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

A inverse

B direct

C exponential

D negative

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 supply

C indicators

Question #32

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

A equilibrium

B demand

C supply

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

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

Question #34

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

A An increase in income and the good is inferior

B An increase in the price of a complementary good

C An increase in the number of sellers

D An increase in the number of buyers

Question #35

All the following are the determinants of demand except ______.

A price of substitutes in production

B the prices of related goods

C consumer tastes

D consumer expectations

E consumers’ incomes

Question #36

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

A a downward sloping curve

B a vertical line

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

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

Question #38

Which of the following specifically refers to demand?

A The buyer side of any market

B The producer side of any market

C The seller side of any market

D Both the buyer and seller sides of any market

Question #39

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

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

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

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

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

Question #40

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

A rotation of; shift of

B rotation of; movement along

C movement along; shift of

D shift of; movement along

Question #41

A demand curve shows the ______.

A inverse relationship between price and quantity demanded for a product

B positive relationship between price and quantity supplied for a product

C inverse relationship between price and quantity supplied for a product

D positive relationship between price and quantity demanded 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 positive

B direct

C equal

D negative

Question #44

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

A produced at various possible prices

B given away at only one price

C subsidized at various possible prices

D consumed at various possible prices

Question #45

All competitive markets involve which of the following?

A Government regulators, Price, Demand, Quantity

B Supply, Price, Demand, Quantity

C Supply, Government regulators, Price, Demand

D Supply, Price, Government regulators

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; movement along

B movement along; shift of

C shift of; movement along

D shift of; shift of

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

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