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1 | |
All of the following statements are correct except: |
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| | A) | The interaction of demand and supply determines the price and amount of output produced and sold in the market. |
| | B) | Markets are characterised by buyers and sellers. |
| | C) | In equilibrium there is neither a shortage or a surplus. |
| | D) | When the market price falls, the demand curve shifts. |
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2 | |
When a market is in equilibrium: |
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| | A) | No shortages exist. |
| | B) | Quantity demanded equals quantity supplied. |
| | C) | A price is established that clears the market. |
| | D) | No surpluses exist. |
| | E) | All the above. |
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3 | |
All the following statements are incorrect except: |
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| | A) | When a market is in equilibrium, there may be either excess demand or excess supply. |
| | B) | When a market is in equilibrium, buyers are happy because price is low. |
| | C) | When a market is in equilibrium, both excess demand and excess supply are zero. |
| | D) | When a market is in equilibrium, sellers are happy because price is high. |
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4 | |
An increase in both demand and supply causes an: |
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| | A) | Increase in equilibrium price but a decrease in equilibrium quantity. |
| | B) | Increase in equilibrium quantity and either an increase or decrease in equilibrium price. |
| | C) | Increase in equilibrium quantity but a decrease in equilibrium price. |
| | D) | Increase in equilibrium price and increase in equilibrium quantity. |
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5 | |
The location of the supply curve of widgets depends on: |
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| | A) | The prices of the inputs used to produce widgets. |
| | B) | The state of technology used to produce widgets. |
| | C) | The number of producers and sellers of widgets in the market. |
| | D) | All of the above. |
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6 | |
If there is a shortage of a good on the market, then we would expect this shortage to: |
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| | A) | Put pressure on price to fall and quantity supplied to rise. |
| | B) | Put pressure on price to rise and quantity demanded to rise. |
| | C) | Put pressure on price to fall and quantity demanded to rise. |
| | D) | Put pressure on price to rise and quantity demanded to fall. |
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7 | |
Excess demand exists when: |
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| | A) | Quantity demanded does not equal supply. |
| | B) | Demand does not equal quantity supplied. |
| | C) | Demand does not equal supply. |
| | D) | Quantity demanded exceeds quantity supplied at the equilibrium price. |
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8 | |
At the market equilibrium price: |
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| | A) | There is no excess demand, but excess supply is greater than zero. |
| | B) | Quantity demanded equals quantity supplied. |
| | C) | Excess demand is greater than zero, so the market does not clear. |
| | D) | A disequilibrium quantity exists. |
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9 | |
The supply curve: |
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| | A) | Shows the quantity supplied at each specific price. |
| | B) | Slopes downward. |
| | C) | Shows the positive relationship between price and quantity supplied. |
| | D) | A and B. |
| | E) | A and C. |
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10 | |
With a given supply curve, a decrease in demand causes: |
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| | A) | An overall decrease in price but an increase in equilibrium quantity. |
| | B) | An overall increase in price but a decrease in equilibrium quantity. |
| | C) | An overall decrease in price and a decrease in equilibrium quantity. |
| | D) | No change in overall price but a reduction in equilibrium quantity. |
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11 | |
If equilibrium price and quantity increase, demand must have increased. |
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| | A) | TRUE |
| | B) | FALSE |
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12 | |
A price below the equilibrium will lead to a surplus supply of the product. |
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| | A) | TRUE |
| | B) | FALSE |
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13 | |
The factory of a large supplier of washing powder is destroyed in a fire. The price of soap powder is likely to fall. |
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| | A) | TRUE |
| | B) | FALSE |
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14 | |
The increase in equilibrium price will be greater following a decrease in supply the more elastic demand is in. |
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| | A) | TRUE |
| | B) | FALSE |
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15 | |
A market must always be in equilibrium. |
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| | A) | TRUE |
| | B) | FALSE |
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16 | |
Following a contraction of demand, the equilibrium price will probably __________. |
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| | A) | Rise |
| | B) | Fall |
| | C) | Remain constant. |
| | D) | Rise, then fall. |
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17 | |
A market surplus will lead to ______ by suppliers. |
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| | A) | Panic |
| | B) | Celebration |
| | C) | Discounting |
| | D) | Expansion |
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18 | |
Two new firms enter a market, the supply curve will shift to the _______ and the price will probably _________. |
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| | A) | Right, fall |
| | B) | Left, fall |
| | C) | Right, rise |
| | D) | Left, rise |
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19 | |
Controlling supply enables firms to manage ________. |
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| | A) | Inputs |
| | B) | Demand |
| | C) | Prices |
| | D) | Costs |
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20 | |
An ability to differentiate between good and bad product suppliers leads to a ________ equilibrium. |
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| | A) | Mixed |
| | B) | Market |
| | C) | Pooling |
| | D) | Wrong |