Markets And Prices Quiz 5 (18 MCQs)

Quiz Instructions

Select an option to see the correct answer instantly.

1. 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, .....

Correct Answer: B) Chicken.

2. What is it called when the government uses some tool other than money to allocate resources?

Correct Answer: B) Rationing.

3. A price floor typically creates .....

Correct Answer: B) A surplus.

4. In which stage of the product life cycle, would a business cut prices to attract competitors' customers to purchase its products?

Correct Answer: D) Decline.

5. Which one of the following measures of elasticity indicates that two goods are substitutes

Correct Answer: C) A positive cross elasticity of demand.

6. A competitive market is characterized by .....

Correct Answer: A) A large number of sellers and buyers.

7. If a manufacturer/producer sets the price too high ..... (choose the one that is FALSE)

Correct Answer: A) There will be a shortage.

8. A demand curve is drawn on the assumption that

Correct Answer: D) Factors affecting demand, other than price, remain constant.

9. The cross elasticity of demand between goods X and Y is positive. This implies that they are

Correct Answer: B) Substitute goods.

10. In a typical demand schedule, quantity demanded

Correct Answer: D) Varies inversely with price.

11. An established minimum price that buyers must pay for a good or service is known as what?

Correct Answer: B) Price Floor.

12. 'Price high-Sales volume low and high profit margins'. This strategy occurs in what kind of market?

Correct Answer: D) A niche market.

13. Two goods with a XED of +0.7 are ..... for each other than two goods with a XED of +0.3.

Correct Answer: B) Stronger substitutes.

14. In a mass market, the price will be what?

Correct Answer: B) Kept low in order to fight off the competition.

15. At a given price, the amount by which quantity supplied exceeds quantity demanded yields a .....

Correct Answer: A) Surplus.

16. If you have a shift right of supply due to improvements in technology, then .....

Correct Answer: A) Price would go down.

17. The Law of Demand states that as quantity demanded decreases .....

Correct Answer: C) Price increases.

18. When there is an increase in prices, which of the following would a buyer be motivated to do?

Correct Answer: C) Both of these.