ECO 102 H REVIEW (Chapter 4: The Market Forces Of Supply And Demand)
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Choose the BEST answer. Read the explanation if there is.
- 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.The downward-sloping line relating price and quantity demanded is called the demand curve.
- A.
True
- B.
False
- 13.To analyze how market works, we need to determine the market demand.
- A.
True
- B.
False
- 14.Because the market demand curve holds other things constant, it need not be stable over time.
- 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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