Chapter 4 MC Sections 1-3 — The Market Forces of Supply and Demand

Chapter 4 MC Sections 1-3 — The Market Forces of Supply and Demand

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Chapter 4 The Market Forces of Supply and Demand Multiple Choice 1. The forces that make market economies work are a. work and leisure. b. demand and supply. c. regulation and restraint. d. taxes and government spending. ANS: B PTS: 1 DIF: 1 REF: 4-0 TOP: Market economy MSC: Interpretive 2. Which of the following are the words most commonly used by economists? a. surplus and shortage b. resources and allocation c. supply and demand d. theory and practice ANS: C PTS: 1 DIF: 1 REF: 4-0 TOP: EconomistsMSC: Interpretive 3. In a market economy, a. supply determines demand and, in turn, demand determines prices. b. demand determines supply and, in turn, supply determines prices. c. the allocation of scarce resources determines prices and, in turn, prices determine supply and demand. d. supply and demand determine prices and, in turn, prices allocate scarce resources. ANS: D PTS: 1 DIF: 2 REF: 4-0 TOP: Market economy MSC: Interpretive 4. In a market economy, supply and demand are important because they a. play a critical role in the allocation of the economy’s scarce resources. b. determine how much of each good gets produced. c. can be used to predict the impact on the economy of various events and policies. d. All of the above are correct. ANS: D PTS: 1 DIF: 1 REF: 4-0 TOP: Market economy MSC: Interpretive 5. A market is a a. group of buyers and sellers of a particular good or service. b. group of people with common economic characteristics. c. place where buyers and sellers come together to engage in trade. d. place where an auctioneer helps set prices and arrange sales. ANS: A PTS: 1 DIF: 1 REF: 4-1 TOP: Markets MSC: Definitional 6. For a market for a good or service to exist, a. there must be a group of buyers and sellers. b. there must be a specific time and place at which the good or service is traded. c. the price of the good must be determined by the sellers. d. All of the above are correct. ANS: A PTS: 1 DIF: 1 REF: 4-1 TOP: Market(s MSC: Definitional 117
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118 Chapter 4/The Market Forces of Supply and Demand 7. The term market always refers to a. an arrangement in which buyers and sellers meet at a specific time and place. b. an arrangement in which an auctioneer plays at least a limited role in setting prices. c. a group of buyers and sellers of a particular good or service. d. All of the above are correct. ANS: C PTS: 1 DIF: 1 REF: 4-1 TOP: Markets MSC: Definitional 8. A group of buyers and sellers of a particular good or service is called a a. coalition. b. partnership. c. market. d. union. ANS: C PTS: 1 DIF: 1 REF: 4-1 TOP: Markets MSC: Definitional 9. A market is always characterized by a. a high degree of organization. b. an individual or small group of individuals who set the price of the product for all buyers and sellers. c. the presence of buyers and sellers.
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This note was uploaded on 07/22/2009 for the course ECON 203 taught by Professor Nelson during the Fall '08 term at Texas A&M.

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Chapter 4 MC Sections 1-3 — The Market Forces of Supply and Demand

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