#1
What is market equilibrium?
When demand exceeds supply
When supply exceeds demand
When demand equals supply
When supply and demand are unrelated
#2
Which of the following is NOT a factor affecting demand?
Price of related goods
Income of consumers
Number of sellers in the market
Consumer preferences
#3
What is the Law of Demand?
As the price of a good increases, the quantity demanded decreases
As the price of a good increases, the quantity demanded increases
As the price of a good decreases, the quantity demanded decreases
As the price of a good decreases, the quantity demanded increases
#4
What is a determinant of supply?
Consumer preferences
Taxes on production
Number of buyers
Price of substitutes
#5
What happens to the market price if there is a shortage?
It increases
It decreases
It remains the same
It becomes unpredictable
#6
What does the price elasticity of demand measure?
The responsiveness of quantity demanded to changes in price
The responsiveness of supply to changes in price
The total revenue of a firm
The change in consumer preferences
#7
What is the main function of a price ceiling?
To prevent prices from rising above a certain level
To encourage producers to increase supply
To ensure that prices stay below the equilibrium level
To promote competition among producers
#8
Which of the following is an example of a price floor?
Minimum wage
Subsidies for farmers
Rent control laws
Sales tax
#9
What does a shift to the left in the supply curve indicate?
Decrease in quantity supplied
Increase in quantity supplied
Decrease in price
Increase in price
#10
What is price elasticity of demand?
A measure of how responsive quantity demanded is to a change in price
A measure of how responsive quantity supplied is to a change in price
A measure of how responsive quantity demanded is to a change in income
A measure of how responsive quantity supplied is to a change in income
#11
What happens to equilibrium price and quantity if both demand and supply increase?
Price increases, quantity decreases
Price decreases, quantity increases
Price decreases, quantity decreases
Price increases, quantity increases
#12
In a perfectly competitive market, what condition must hold true at equilibrium?
Price equals marginal cost
Price equals average cost
Price equals marginal revenue
Price equals fixed cost
#13
Which of the following is NOT a characteristic of a perfectly competitive market?
Many buyers and sellers
Homogeneous products
Barriers to entry
Perfect information
#14
What effect does an increase in consumer income have on normal goods?
Increase in demand
Decrease in demand
Increase in supply
Decrease in supply
#15
What is the role of government in a market economy concerning price controls?
To ensure that prices remain flexible
To eliminate all price controls
To intervene when prices are considered unfair
To fix prices above market equilibrium
#16
What is the primary determinant of price elasticity of demand?
Substitutability
Income level
Advertising
Market structure
#17
In monopolistic competition, firms differentiate their products to:
Reduce costs
Create barriers to entry
Increase market power
Increase elasticity of demand
#18
What does a perfectly inelastic demand curve look like?
Horizontal line
Vertical line
Downward sloping line
Upward sloping line