True/False
Indicate whether the
statement is true or false.
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1.
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Market equilibrium is the situation in which the quantity of output supplied is
equal to the quantity demanded.
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2.
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The amount of a price change is affected by the elasticity of both the supply
and demand curves.
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3.
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If the price of an item is too high in a competitive market, a shortage appears
until the price goes down.
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Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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4.
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Which of the following is NOT a reason why prices effectively perform the
allocation function?
a. | Competitive markets find their own prices without interference. | b. | Prices favor neither
the producer nor the consumer. | c. | Prices remain surprisingly stable despite
unexpected events. | d. | Prices are easily
understood. |
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5.
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In a market economy, a high price is a signal for
a. | producers to supply more and consumers to buy less. | b. | producers to supply
less and consumers to buy more. | c. | government to intervene to protect
consumers. | d. | producers to supply less and consumers to buy less. |
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6.
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At a given price, a surplus occurs when
a. | the quantity demanded is more than the quantity supplied. | b. | the quantity
demanded is the same as the quantity supplied. | c. | the quantity supplied is less than the quantity
demanded. | d. | the quantity supplied is greater than the quantity
demanded. |
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7.
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The federal minimum wage law demonstrates
a. | market equilibrium. | b. | a societal choice for economic equity over
efficiency. | c. | the function of equilibrium price in a competitive market. | d. | government
intervention to ensure the equilibrium price. |
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8.
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When economic or political conditions are unstable,
a. | the price of gold rises to $850 per ounce. | b. | the supply of gold
decreases. | c. | the price of gold decreases. | d. | the demand for gold
increases. |
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9.
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If a competitive market is at equilibrium, and if there is a sudden increase in
demand, then a temporary
a. | surplus will occur and the price will increase. | b. | shortage will occur
and the price will fall. | c. | surplus will occur and the price will
fall. | d. | shortage will occur and the price will increase. |
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10.
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Deficiency payments are part of a federal program to assist
a. | farmers. | c. | consumers. | b. | senior citizens. | d. | college
students. |
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