#1
1. In economics, what does 'market equilibrium' refer to?
A state where supply equals demand
A situation where demand exceeds supply
A situation where supply exceeds demand
A state where both supply and demand are zero
#2
2. What happens in a market when there is a surplus of a good?
Prices increase
Prices decrease
Prices remain constant
No impact on prices
#3
3. What is the term for a situation where quantity demanded exceeds quantity supplied in a market?
Market equilibrium
Market surplus
Market shortage
Market disequilibrium
#4
4. How does the government intervene to establish price floors?
Setting a maximum price for a good
Setting a minimum price for a good
Removing all price restrictions
Controlling production of the good
#5
6. What is the main determinant of elasticity of demand?
Income
Price
Substitutability
Market equilibrium
#6
7. In a competitive market, what is likely to happen if the price is set above the equilibrium price?
Shortage
Surplus
Equilibrium
No impact on the market
#7
11. What is the primary function of the price mechanism in a market economy?
To control government policies
To allocate resources efficiently
To fix prices permanently
To eliminate competition
#8
12. How does the concept of 'disequilibrium' differ from 'equilibrium' in a market?
Disequilibrium refers to a balance between supply and demand
Disequilibrium refers to an imbalance between supply and demand
Equilibrium refers to excess demand
Equilibrium refers to excess supply
#9
5. In the context of market equilibrium, what does the term 'elasticity' refer to?
The responsiveness of quantity demanded to a change in price
The total quantity of a good demanded
The total quantity of a good supplied
The responsiveness of producers to market trends
#10
8. What role does the price mechanism play in achieving market equilibrium?
It ensures a constant surplus of goods
It adjusts prices to balance supply and demand
It creates artificial shortages
It has no impact on market equilibrium
#11
9. What is the significance of the concept of 'invisible hand' in market equilibrium?
Government intervention in the market
Natural forces guiding self-interest to promote the common good
Setting fixed prices by the producers
Price ceilings to control inflation
#12
10. How does technological advancement impact market equilibrium?
Shifts the demand curve
Shifts the supply curve
Both a and b
No impact on market equilibrium
#13
13. What impact does an increase in consumer income generally have on the demand for normal goods?
Increase in demand
Decrease in demand
No impact on demand
Shift in supply
#14
14. How does the concept of 'price elasticity of supply' contribute to market understanding?
It measures how much consumers are willing to pay for a good
It measures the responsiveness of quantity supplied to a change in price
It determines the maximum price a producer can charge
It is irrelevant in market analysis