Understanding Market Interactions and Structures

Front

Which of the following best describes the interaction between households and businesses in a circular flow diagram? Options: Households provide goods and services to businesses, and businesses provide resources to households. Households provide resources to businesses, and businesses provide goods and services to households. Households and businesses both provide goods and services to the government. Businesses provide resources to households, and households provide goods and services to businesses.

Back

Households provide resources to businesses, and businesses provide goods and services to households.

Front

In a circular flow diagram, what is the role of the product market?

Back

It is where businesses sell goods and services to households.

Front

Which of the following statements correctly defines the law of demand? As the price of a good increases, the quantity demanded increases., As the price of a good decreases, the quantity demanded increases., As the price of a good increases, the quantity supplied decreases., As the price of a good decreases, the quantity supplied increases.

Back

As the price of a good decreases, the quantity demanded increases.

Front

What is the law of supply?

Back

As the price of a good increases, the quantity supplied increases.

Front

Which of the following is a determinant that can shift the demand curve? Changes in technology, Changes in consumer income, Changes in the number of suppliers, Changes in production costs

Back

Changes in consumer income

Front

How does a price floor set above the equilibrium price affect the market?

Back

It creates a surplus.

Front

What happens when a price ceiling is set below the equilibrium price?

Back

It creates a shortage.

Front

Which form of business organization is characterized by unlimited liability and a single owner?

Back

Sole proprietorship

Front

In which type of market structure are there many sellers and no barriers to entry?

Back

Pure (perfect) competition

Front

Which market structure is characterized by a single seller with significant barriers to entry?

Back

Monopoly