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Unformatted text preview: Problem Set Chp.4: Demand and Supply Applications MULTIPLE CHOICE: Choose the one alternative that best completes the statement or answers the question. 1. The adjustment of ________ is the rationing mechanism in free markets. A. price. B. quantity. C. supply. D. demand. 2. It is necessary to ration a good whenever __________ exists. A. excess demand B. excess supply C. a surplus 3. Consider a market that has many buyers but only one seller. Assume the seller has only one unit of the product to sell. Then the market demand curve will be ________ and the seller's supply curve will be ________. A. downward sloping; upward sloping. B. horizontal; horizontal. C. downward sloping; vertical. D. vertical; upward sloping. 4. When government imposes price ceilings and price floors in a market A. price no longer serves as a rationing device. B. efficiency in the market is increased. C. shortages and surpluses are eliminated. D. buyers and sellers are both better off. 5. The government wants to protect consumers from rising food prices....
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This homework help was uploaded on 04/06/2008 for the course ECON 2005 taught by Professor Zirkle during the Spring '07 term at Virginia Tech.
- Spring '07