Which of the following is NOT characteristic of a market economy? |
Significant government intervention |
In a competitive market, the price of the product is |
set by market supply and demand |
Which of the following firms participates in a competitive market? |
A corn farmer |
In an imperfect market, individual firms |
are able to influence the price of their product. |
Which of the following firms operates as a monopoly? |
A local water utility |
According to the law of demand, what is the relationship between price and quantity demanded? |
Inverse |
Refer to the following graph. Click to view enlarged image. The demand curve slopes downward because |
prices and quantity demanded move in opposite directions. |
A change in which of the following will cause a change in the quantity demanded of coffee? |
The price of coffee |
Suppose that burgers and fries are complements in consumption. If the price of fries increases |
overall demand for burgers will decrease. |
Suppose that Coca Cola and Pepsi are substitutes in consumption. If the price of Coca Cola decreases, then |
both the equilibrium price and the quantity of Pepsi demanded will decrease. |
According to the law of supply, what is the relationship between price and quantity supplied? |
Direct |
The supply curve is _______________ driven by the law of supply |
Upward sloping |
A change in which of the following will cause a change in the quantity supplied of coffee? |
The price of coffee |
Which of the following will cause a shift in the supply curve for tobacco? |
An improvement in the technology used in the production of tobacco |
Flour is a factor of production of cupcakes. How will an increase in the price of flour affect the market for cupcakes? |
Overall supply will decrease |
When a market is in equilibrium, which of the following is true? |
Quantity supplied is equal to quantity demanded |
At a price of $15, this market is experiencing a(n) |
surplus |
At a price of $5, this market is experiencing |
a shortage |
Suppose pasta salad is a normal good. If the price of pasta (a major ingredient in pasta salad) increases and income also increases, the |
equilibrium quantity of pasta salad may either increase or decrease and the equilibrium price of pasta salad will increase. |
What must happen to the market price in order for a shortage to be eliminated? |
price must rise |
chapter 3 quiz macroeconomics
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