This quiz works best with JavaScript enabled. Home > Economics > Microeconomics > Prices > Markets And Prices – Quiz 3 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Markets And Prices Quiz 3 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. A surplus causes A) Producers to lower their to the equilibrium price. B) Consumers to pay more for goods. C) Producers to increase their price to the equilibrium price. D) New workers to be hired. Show Answer Correct Answer: A) Producers to lower their to the equilibrium price. 2. What is an important indicator about the relative scarcity of a product or service? A) How well known it is. B) The "invisible hand". C) Its cost of production. D) Its market price. Show Answer Correct Answer: D) Its market price. 3. Which one of the following best describes the relationship between the demand for air travel and the demand for airline pilots? A) Composite demand. B) Derived demand. C) Joint demand. D) Complementary demand. Show Answer Correct Answer: B) Derived demand. 4. A product has a price elasticity of supply of +1.5. If its price falls from £10.00 to £8.00, its supply will A) Decrease by 30%. B) Decrease by 40%. C) Increase by 30%. D) Increase by 40%. Show Answer Correct Answer: A) Decrease by 30%. 5. As price for a good or service goes up, how does that typically affect the quantity demanded? A) It increases. B) It decreases. C) It does not change. D) None of above. Show Answer Correct Answer: B) It decreases. 6. Which of these is most likely to lead directly to a black market? A) Equilibrium. B) Supply shock. C) Price floor. D) Rationing. Show Answer Correct Answer: D) Rationing. 7. A price ceiling ..... A) Would be below the equilibrium. B) Would be at the equilibrium. C) Would be above the equilibrium. D) None of above. Show Answer Correct Answer: A) Would be below the equilibrium. 8. When a price ceiling is in place keeping the price below the market price, which is true of the quantity demanded & quantity supplied? A) Quantity Demanded is greater. B) Quantity Supplied is greater. C) Quantity Demanded equals Quantity supplied. D) None of above. Show Answer Correct Answer: A) Quantity Demanded is greater. 9. A business is likely to charge a high price when: A) When a product is of a low quality compared to its competitors. B) Its products are aimed at customers with a low income. C) It launches a new, innovative product onto the market. D) There is a lot of competition in a market. Show Answer Correct Answer: C) It launches a new, innovative product onto the market. 10. What is the main form of communication between the producer and consumer? A) Commercials. B) Price. C) Revenue. D) Supply. Show Answer Correct Answer: B) Price. 11. If there is a surplus in the market, the price is likely to ..... A) Fluctuate. B) Decrease. C) Increase. D) Stay the same. Show Answer Correct Answer: B) Decrease. 12. When buyers purchase exactly as much as sellers are willing to sell, what is reached? A) Supply and Demand. B) Excess Demand. C) Equilibrium. D) Price Floor. Show Answer Correct Answer: C) Equilibrium. 13. A price floor ..... A) Would be below the equilibrium. B) Would be at the equilibrium. C) Would be above the equilibrium. D) None of above. Show Answer Correct Answer: C) Would be above the equilibrium. 14. Profit as a percentage of the selling price A) Cost-plus pricing. B) Retained profit. C) Profit margins. D) Net profit. Show Answer Correct Answer: C) Profit margins. 15. The price elasticity of demand for a good made by a firm is-0.6. If the firm raises the price of the good, its revenues will A) Rise. B) Stay the same. C) Fall by more than 6 per cent. D) Fall by less than 6 per cent. Show Answer Correct Answer: A) Rise. 16. Adam Smith encourages a market economy to limit the role of the government, because when the government interferes in the economy there is a negative impact on A) Growth. B) Producers only. C) Consumers only. D) Public support for the government. Show Answer Correct Answer: A) Growth. 17. As price for a good or service goes up, how does that typically affect the quantity supplied? A) It increases. B) It decreases. C) It does not change. D) None of above. Show Answer Correct Answer: A) It increases. 18. Income elasticity of demand is positive when demand and income change in the same direction. A positive YED indicates that the good in question is ..... A) An inferior good. B) A normal good. C) A luxury good. D) None of above. Show Answer Correct Answer: B) A normal good. 19. A new company in town 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. 20. The income elasticity of demand for bus travel is-1.5. This means that A) A 10% increase in fares will lead to a 15% decrease in passengers. B) Bus travel is an inferior good. C) Bus travel has a negative cross elasticity of demand. D) As unemployment falls, more people will use buses. Show Answer Correct Answer: B) Bus travel is an inferior good. 21. In the summer picnic season, a sharp rise in the price of burgers may lead to an increase in the demand for the substitute good, ..... A) Buns. B) Relish. C) Coleslaw. D) Chicken. Show Answer Correct Answer: D) Chicken. 22. What is it called when the government uses some tool other than money to allocate resources? A) Supply management. B) Rationing. C) Disequilibrium. D) Resource Allocation. Show Answer Correct Answer: B) Rationing. 23. A price floor typically creates ..... A) A shortage. B) A surplus. C) Equilibrium. D) None of above. Show Answer Correct Answer: B) A surplus. 24. In which stage of the product life cycle, would a business cut prices to attract competitors' customers to purchase its products? A) Growth. B) Maturity. C) Introduction. D) Decline. Show Answer Correct Answer: D) Decline. 25. Which one of the following measures of elasticity indicates that two goods are substitutes A) A negative income elasticity of demand. B) A positive price elasticity of demand. C) A positive cross elasticity of demand. D) A negative cross elasticity of demand. Show Answer Correct Answer: C) A positive cross elasticity of demand. 26. A competitive market is characterized by ..... A) A large number of sellers and buyers. B) Sellers acting together to set prices. C) Diverse products. D) Uninformed buyers and sellers. Show Answer Correct Answer: A) A large number of sellers and buyers. 27. If a manufacturer/producer sets the price too high ..... (choose the one that is FALSE) A) There will be a shortage. B) There will be an incentive to change. C) They are in disequilibrium. D) There will be a surplus. Show Answer Correct Answer: A) There will be a shortage. 28. A demand curve is drawn on the assumption that A) Quantity demanded always increases as price falls. B) Changes in price do not influence supply. C) Price elasticity of demand does not vary along the demand curve. D) Factors affecting demand, other than price, remain constant. Show Answer Correct Answer: D) Factors affecting demand, other than price, remain constant. 29. The cross elasticity of demand between goods X and Y is positive. This implies that they are A) Normal goods. B) Substitute goods. C) Goods in composite demand. D) Complementary goods. Show Answer Correct Answer: B) Substitute goods. 30. In a typical demand schedule, quantity demanded A) Varies directly with price. B) Varies proportionately with price. C) Is determined by the elasticity of demand. D) Varies inversely with price. Show Answer Correct Answer: D) Varies inversely with price. ← PreviousNext →Related QuizzesMicroeconomics QuizzesEconomics QuizzesMarkets And Prices Quiz 1Markets And Prices Quiz 2Markets And Prices Quiz 4 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books