#1
Which of the following is an example of a government-imposed price ceiling?
Rent control
ExplanationGovernment sets a maximum price for rent to keep it affordable.
#2
Which of the following is an example of a government-imposed price floor?
Minimum wage law
ExplanationGovernment sets a minimum price for labor to ensure workers are paid fairly.
#3
What is the term used to describe the situation where the quantity demanded exceeds the quantity supplied at the current price level?
Shortage
ExplanationNot enough of a good available at the current price.
#4
Which of the following is not a determinant of supply?
Consumer preferences
ExplanationSupply is influenced by factors like costs, technology, and government policy, not by consumer preferences.
#5
What is the term used to describe the situation where the price of a good or service is determined solely by the forces of supply and demand without government intervention?
Free market
ExplanationMarket operates without external interference in setting prices.
#6
What is the term used to describe the quantity of a good or service that producers are willing and able to offer for sale at various prices during a given period?
Supply
ExplanationAmount of a product available for sale at different prices.
#7
Which of the following is a determinant of demand?
Price of related goods
ExplanationChanges in the price of substitutes or complements affect demand.
#8
If the demand for a product decreases while supply remains constant, what is likely to happen to the equilibrium price and quantity?
Price increases and quantity decreases
ExplanationLess demand leads to lower prices and less quantity sold.
#9
If the government imposes an excise tax on a good, what typically happens to the equilibrium price and quantity?
Price decreases and quantity decreases
ExplanationTax increases cost for producers, reducing both price and quantity sold.
#10
Which of the following is a tool used by the government to control the money supply in an economy?
Monetary policy
ExplanationGovernment adjusts interest rates and money supply to influence economic activity.
#11
If the demand for a product is inelastic and its price decreases, what will happen to the total revenue of the producers?
Decrease
ExplanationDecrease in price outweighs increase in quantity sold, reducing total revenue.
#12
What happens to the equilibrium price and quantity in a market if both demand and supply increase?
Price increases, quantity increases
ExplanationIncrease in both demand and supply leads to higher prices and more quantity sold.
#13
Which of the following is a characteristic of a perfectly competitive market?
Many buyers and sellers
ExplanationNumerous participants ensuring no single entity has control over prices.
#14
In which market structure does a single firm dominate the entire market and has the ability to control prices?
Monopoly
ExplanationOne company dominates the market, allowing it to dictate prices.
#15
In a market with perfectly elastic demand, how does a tax imposed by the government affect the equilibrium price and quantity?
Price remains constant and quantity decreases
ExplanationProducers bear full tax burden, reducing quantity sold but not affecting price.