The market place and the law of demand

1. … influence the price of goods in a market economy.

     A – Consumers

     B - Sellers

     C – Demanders

     D – Suppliers

  2. … is how people decide what to buy and at what price.

    A – Supply

    B – Demand

    C - Utility

    D – Marketplace

3. Supply is how … decide how much to sell and what to charge.

    A – buyers

    B – consumers

    C – sellers

    D – demanders

4. In economic term, the marketplace …

    A – exists only at the local level.

    B – exists only at the national level.

    C - is a place where people buy food.

    D – operates through voluntary exchange.

5… represents actions between buyers and sellers.

A – A market

B – A substitution effect

C - The law of demand

D - Real income effect

6. The … states that the quantity demanded of a good or service varies inversely with its price.

     A – marginal utility

B - substitution effect

C – real income effect

D – law of demand

7… is extra usefulness or satisfaction a person gets from acquiring or using one more unit of a product.

A – marginal utility

B - substitution effect

C – real income effect

D – the law of demand

8. The change in quantity demanded because of the change in the relative price

    of the product is known as the ….

A – marginal utility

B - substitution effect

C – real income effect

D – the law of demand

9. Change in quantity demanded because of a change in price that alters

   consumers' real income is known as….

A – marginal utility

B - substitution effect

C – real income effect

D – the law of demand

10. Which statement reflects the inverse relationship between quantity

     demanded and price?

      A - As the price goes up, quantity demanded goes up.

      B - As the price goes down, quantity demanded goes up.

      C – As the supply goes up, the price goes up.

      D - As the supply goes up, the demand goes up.

11. Which economic rule states that additional satisfaction people get from

     consuming one more unit of a product will lessen with each additional unit

     they consume?

     A - real income effect

     B – law of demand

     C – law of diminishing marginal utility

     D – substitution effect

12. According to substitution effect, if two items satisfy the same need and the

     price of one rises,

     A – people will buy the higher priced item.

     B – people will buy the lower priced item.

     C – the demand will go up.

     D – people will buy something else.

13. The amount of goods people can actually buy with their money is …

     A - voluntary exchange

     B – utility

     C – purchasing power

     D – substitution effect

14. The movement from point A to point B on the graph shows

      A - a decrease in demand.

     B -  an increase in quantity demanded.

     C -  a decrease in quantity demanded

     D – an increase in demand

Unit 6

THE LAW OF SUPPLY

 

1. What is the law of supply?

    A - the principle that suppliers will normally offer less for sale at high

          prices and more at lower prices

    B - the principle that suppliers will normally offer more for sale at high

          prices and less at lower prices

    C – the principle that links the increase in taxes to the position of supply

          curve

    D – the principle that links income and population increase to the position

           of supply curve

 

2. What causes the demand curve to shift?

    A - the increase/decrease in need

       B - the increase/decrease in volume

    C – the increase/decrease in price

    D – the increase/decrease in production

 

3. What causes the increase in supply?

    A – the increase/decrease in demand

    B – the increase/decrease in production

    C – the increase/decrease in volume

    D – the increase/decrease in price

 

4. Changes in price drive quantities demanded and supplied to a point of

  stability, known as …

    A - market equilibrium

   B – equilibrium price

    C – stability point

    D – determinant of supply

 

5. The line that graphically shows the quantity supplied at each possible price

   is …

A – law of supply

B – quantity supplied

C – supply curve

D – supply schedule

 

6. Economic rule stating that price and quantity supplied move in the same

   direction is …

    A – law of supply

    B – law of demand

    C – supply curve

    D – supply schedule

7. Prices on goods and services are determined …

   A – only by demand

   B – only by supply

   C – both by demand and supply

   D – neither by demand nor by supply

 

8. The use of technology to produce and distribute goods will …

   A – not affect supply

  B – increase supply

   C – decrease supply

   D – move the supply curve to the left

 

9. The equilibrium price is …

   A- the price at which the supply meets the demand

   B – the price at which the quantity supplied by sellers is above the quantity

         demanded by buyers

   C – the price at which demand curve and supply curve intersect

   D - the price at which supply curve doesn’t shift

 

10. The law that says that adding units of one factor of production increases

total output is…

   A – law of supply

   B – law of demand

   C – law of diminishing returns

   D – law of increasing costs

 

11.  The movement from point A to point B on the graph shows …

 

      

                                                                A – a decrease in supply

                                                      B - an increase in supply

                                                      C – a decrease in quantity supplied

                                                      D – an increase in quantity supplied

 

Unit 7

 

PERFECT COMPETITION

1. A market with many well-informed buyers and sellers, identical products, and

free entry and exit is called…

A – monopoly

B – monopolistic competition

C – perfect competition

D – imperfect competition

 

2. In a market with only one seller, that seller has …

A – a monopoly

B – an oligopoly

C – monopolistic competition

D – perfect competition

 

3. Firms selling identical products create…

A – perfect competition

B – monopoly

C – oligopoly

D – monopolistic competition

 

4. A product considered the same regardless of who makes or sells it is …

A – brand-name

B – commodity

C – good

D – service

 

5. Any factor that makes it difficult for new firms to enter a market is…

A – product differentiation

B – barrier to entry

C – market structure

D – interdependent behavior

 

6. Emphasis on minor differences between the products is …

A – imperfect competition

B - product differentiation

C – perfect competition

D – monopoly

 

7. A condition in which only one seller of a good or service exist is called …

A – perfect competition

B - imperfect competition

C – monopoly

D – oligopoly

 

8. A condition in which only a few sellers of a good or service exist is…

A –monopoly

B – oligopoly

C – perfect competition

D – monopolistic competition

 

9. Market situation in which there are numerous buyers and sellers, and no single

buyer or seller can effect price is known as…

A – perfect competition

B – monopolistic competition

C – imperfect competition

D – oligopoly

 

10. Market situation in which a single supplier makes up an entire industry is…

  A – monopoly

  B – oligopoly

  C – perfect competition

  D – monopolistic competition

 

11. One advantage of oligopoly is…

A – more stable prices

B – fewer product offerings

C – lower prices per product

D – better services

 

12. Non-price competition is a characteristic of both…

A – monopolistic competition and oligopoly

B – perfect competition and a pure monopoly

C – an oligopoly and perfect competition

D – monopolistic competition and pure monopoly

 

13. Only price at which quantity demanded equals quantity supplied is …

  A – easy entry and exit

B – equilibrium price

C – perfect competition

D – large market

14. In perfect competition prices are controlled by …

A – supply and demand

B – buyers

C – sellers

D - government

 

 

Unit 8