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Eco 102 H Review (chapter 4: The Market Forces Of Supply And Demand)

31 Questions
Eco 102 H Review (chapter 4: The Market Forces Of Supply And Demand)

Choose the BEST answer. Read the explanation if there is.

Questions and Answers
  • 1. 
    Prices and Inputs are the forces that make market economies work. 
    • A. 

      True

    • B. 

      False

  • 2. 
    The term supply and demand refer to the behavior of people as they interact with one another in a monopolistic market. 
    • A. 

      True

    • B. 

      False

  • 3. 
    A market is a group of households and firms of a particular good or service. 
    • A. 

      True

    • B. 

      False

  • 4. 
    A less organized market has buyers and sellers who meet at a specific time and place, where an auctioneer helps set price and arrange sales.
    • A. 

      True

    • B. 

      False

  • 5. 
    Price and quantity are determined by all buyers and sellers as they interact in the marketplace.
    • A. 

      True

    • B. 

      False

  • 6. 
    Economists use the term competitive market to describe the a market in which there are so many buyers and so many sellers that each has a negligible impact on the market. 
    • A. 

      True

    • B. 

      False

  • 7. 
    What are the two characteristics of the highest form of competition in the market? 
    • A. 

      The buyers and sellers are so numerous that no single buyer or seller has any influence over the market price.

    • B. 

      The buyers and sellers are only few that they directly influence the market price.

    • C. 

      The goods offered for sale are exactly the same

    • D. 

      The goods offered for sale are different.

  • 8. 
    Because buyers and sellers in perfectly competitive market mus accept the price the market determines, they are said to be price takers. 
    • A. 

      True

    • B. 

      False

  • 9. 
    Perfecetly competitive markets are the easiest to analyze because everyone participating in the market takes the price as given by market conditions. 
    • A. 

      True

    • B. 

      False

  • 10. 
    The quantity demanded of any good is the amount of the good that sellers are willing to sell to the market. 
    • A. 

      True

    • B. 

      False

  • 11. 
    The demand schedule is a table that shows the relationship between the supply of the good and the quantity demanded, holding constant everything else. 
    • A. 

      True

    • B. 

      False

  • 12. 
    • A. 

      True

    • B. 

      False

  • 13. 
    To analyze how market works, we need to determine the market demand.
    • A. 

      True

    • B. 

      False

  • 14. 
    • A. 

      True

    • B. 

      False

  • 15. 
    An increase in demand shifts the curve to the right, and a decrease shifts the curve to the left. 
    • A. 

      True

    • B. 

      False

  • 16. 
    What are the 5 most important variables that can shift the demand curve?
    • A. 

      Income

    • B. 

      Prices of Complements

    • C. 

      Number of Sellers

    • D. 

      Prices of Related Goods

    • E. 

      Tastes

    • F. 

      Expectation

    • G. 

      Number of buyers

  • 17. 
    A curve shifts when there is a change in a relevant variable on either axis. 
    • A. 

      True

    • B. 

      False

  • 18. 
    Tobacco and marijuana appears to be complements rather than substitutes. 
    • A. 

      True

    • B. 

      False

  • 19. 
    Quantity supplied has a positive correlation with price. 
    • A. 

      True

    • B. 

      False

  • 20. 
    Market demand and supply is the average demand and supply of all buyers and sellers respectively.
    • A. 

      True

    • B. 

      False

  • 21. 
    What are the 4 most important factors that influence the quantity supplied. 
    • A. 

      Price of goods

    • B. 

      Input Prices

    • C. 

      Technology

    • D. 

      Expectations

    • E. 

      Number of Buyers

    • F. 

      Number of Sellers

  • 22. 
    At the equilibrium price, the quantity of the good that buyers are willing and able to buy exactly balances the quantity of that sellers are willing and able to sell. 
    • A. 

      True

    • B. 

      False

  • 23. 
    The equilibrium price is sometimes called the market-balancing price, because at this price, everyone in the market has been satisfied. 
    • A. 

      True

    • B. 

      False

  • 24. 
    The action of buyers and sellers naturally move markets toward the equilibrium of supply and demand. 
    • A. 

      True

    • B. 

      False

  • 25. 
    A surplus is sometimes called a situation of excess demand. 
    • A. 

      True

    • B. 

      False

  • 26. 
    The law of supply and demand says that: the price of any good adjusts to bring quantity supplied and quantity demanded for that good into balance. 
    • A. 

      True

    • B. 

      False

  • 27. 
    What are the three steps in analyzing how some events affect the equilibrium in a market:
    • A. 

      Decide whether the factor is found on the axes or not.

    • B. 

      Determine the elasticity of the demand and supply.

    • C. 

      Decide whether the event shifts the supply curve, demand curve, or, in some cases, both curves.

    • D. 

      Decide whether the curve shifts to the right or to the left.

    • E. 

      Use the supply-and-demand diagram to compare the initial and the new equilibrium.

  • 28. 
    A shift in supply curve is called a "change in supply," and a shift in the demand curve is called a "change in demand."
    • A. 

      True

    • B. 

      False

  • 29. 
    A movement along a fixed supply curve is called a "change in supply," and a movement along a fixed demand curve is called a "change in demand."
    • A. 

      True

    • B. 

      False

  • 30. 
    Buyers and sellers together determine the prices of the economy's many different goods and services. 
    • A. 

      True

    • B. 

      False

  • 31. 
    Change in supply and demand are the signals that guide the allocation of resoures. 
    • A. 

      True

    • B. 

      False

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