This quiz works best with JavaScript enabled. Home > Economics > Microeconomics > Prices > Markets And Prices – Quiz 1 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Markets And Prices Quiz 1 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. ..... and ..... are in competitive supply. A) Computers computer software. B) Light bulbs candles. C) Farmland residential buildings. D) Beef wool. Show Answer Correct Answer: C) Farmland residential buildings. 2. Smith believed that the economy operated according to three natural laws involving this concept ..... A) Trustworthiness. B) Self-interest. C) Compassion. D) Force of nature. Show Answer Correct Answer: B) Self-interest. 3. A product has a price elasticity of demand of-0.5. If the price of this product increases by 10%, then total revenue will A) Rise by more than 10%. B) Rise by less than 10%. C) Fall by more than 10%. D) Fall by less than 10%. Show Answer Correct Answer: B) Rise by less than 10%. 4. If you see a widespread and wildly successful ad campaign change people's preferences, "ceteris parabus or everything being equal" ..... A) The price will go down. B) The price will go up. C) The equilibrium price is the same. D) None of above. Show Answer Correct Answer: B) The price will go up. 5. If you have excess demand, the logical change is to ..... A) Correct consumer demand. B) Restrict production. C) Increase production and the price. D) Lower the price. Show Answer Correct Answer: C) Increase production and the price. 6. When demand is ....., an increase in price causes ..... in total revenue, while a decrease in price causes ..... in total revenue. A) Inelastic; a fall; a rise. B) Elastic; a rise; a fall. C) Elastic; a fall; a rise. D) None of the above. Show Answer Correct Answer: C) Elastic; a fall; a rise. 7. Which of the following will cause the demand to move along the demand curve rather than shifting it? A) Preferences. B) Income. C) Expectations. D) Price. Show Answer Correct Answer: D) Price. 8. A new company creating the same product as you would cause ..... A) The demand to shift to the right. B) The demand to shift to the left. C) The supply to shift to the right. D) The supply to shift to the left. Show Answer Correct Answer: C) The supply to shift to the right. 9. The equilibrium price in a market A) Is the market-clearing price. B) Changes when demand equals supply. C) Always increases when demand rises. D) Is the balance of excess demand and excess supply. Show Answer Correct Answer: A) Is the market-clearing price. 10. If there is a negative value for the cross elasticity of demand between two goods, this means that the two goods are A) Complementary to each other. B) Both inferior goods. C) Unrelated to each other. D) Substitutes for each other. Show Answer Correct Answer: A) Complementary to each other. 11. Which of this is an incentive for consumers to buy more? A) Revenues. B) Demands. C) Supplies. D) Lower prices. Show Answer Correct Answer: D) Lower prices. 12. What type of economic system did Adam Smith support? A) Mixed economic system. B) Planned economic system. C) A free market system. D) Command system. Show Answer Correct Answer: C) A free market system. 13. When there is a shortage, which of the following would a seller be motivated to do? A) Increase production. B) Increase prices. C) Both of these. D) Neither of these. Show Answer Correct Answer: C) Both of these. 14. A shift to the right of the supply curve for a product can be caused by A) The entry of new firms into the industry. B) A rise in popularity of the product. C) A rise in costs of production. D) A tax on the product. Show Answer Correct Answer: A) The entry of new firms into the industry. 15. Which of this is an incentive for producers to supply more? A) Revenues. B) Demands. C) Supplies. D) Price. Show Answer Correct Answer: A) Revenues. 16. The price elasticity of supply of wheat is A) More elastic when there are restrictions on the amount of wheat that can be imported. B) Determined by the availability of substitutes. C) Less elastic in the long run than in the short run. D) Affected by the stocks of wheat available. Show Answer Correct Answer: D) Affected by the stocks of wheat available. 17. In a free market, one can expect a company to charge the highest possible prices they can to make the most money due to the concept of ..... A) Private property. B) Voluntary exchange. C) Competition. D) Profit motive. Show Answer Correct Answer: D) Profit motive. 18. Price elasticity of supply measures the responsiveness of the quantity supplied to a change in A) Demand. B) Price. C) Costs of production. D) The size of firms. Show Answer Correct Answer: B) Price. 19. Which of the following would shift the supply curve? A) Income of buyers. B) Resource Cost. C) # of buyers in a market. D) Price of a related good. Show Answer Correct Answer: B) Resource Cost. 20. At a given price, the amount by which quantity demanded exceeds quantity supplied yields a A) Surplus. B) Shortage. C) Price floor. D) Price ceiling. Show Answer Correct Answer: B) Shortage. 21. Producers and Consumers in a mixed economy convey information through: A) Lawyers. B) Government. C) Prices. D) Contracts. Show Answer Correct Answer: C) Prices. 22. Price ceilings create a(n) ..... A) Equilibrium. B) Surplus. C) Shift in the supply curve. D) Shortage. Show Answer Correct Answer: D) Shortage. 23. If a price floor is set above the equilibrium price A) It has no effect on quantity supplied. B) A shortage results. C) A surplus results. D) The market forces of supply and demand determine prices. Show Answer Correct Answer: C) A surplus results. 24. This is a system in which the government allocates goods and services using factors other than price. A) Black Market. B) Rationing. C) Free Enterprise. D) None of these. Show Answer Correct Answer: B) Rationing. 25. If you have a temporary shock to supply, then you would logically see ..... A) The price go down. B) The price go up. C) The equilibrium price is the same. D) None of above. Show Answer Correct Answer: B) The price go up. 26. When the quantity that consumers are willing and able to buy equals the quantity that producers are willing and able to sell, that market reaches A) Equilibrium. B) The shortage price. C) Market price. D) Disequilibrium. Show Answer Correct Answer: A) Equilibrium. 27. All of the following reduce demand EXCEPT A) A decline in number of consumers. B) An increase in the price of a complement. C) An increase in consumer income. D) A decrease in price of a substitute. Show Answer Correct Answer: C) An increase in consumer income. 28. Which of the following factors would shift demand for a product? A) # of sellers in a market. B) Income of buyers. C) New technology used to make products. D) A tax placed on a good by the government. Show Answer Correct Answer: B) Income of buyers. 29. A price ceiling typically creates ..... A) A shortage. B) A surplus. C) Equilibrium. D) None of above. Show Answer Correct Answer: A) A shortage. 30. What causes prices to move to reach equilibrium in competitive markets? A) The government. B) The stock market. C) Individual buyers and sellers. D) The Federal Reserve Board. Show Answer Correct Answer: C) Individual buyers and sellers. Next →Related QuizzesMicroeconomics QuizzesEconomics QuizzesMarkets And Prices Quiz 2Markets And Prices Quiz 3Markets And Prices Quiz 4 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books