Econ Topic 3

Which of the following best describes equilibrium?

• the point that shows the greatest possible output
• the point where QD and QDS should remain no matter what
• the point that shows the highest market price for a good
• a point that moves continually in response to market changes in QS and QD

Which of the following would be a complement to flashlights in the context of demand for goods?

• floodlights
• batteries
• candles
• binoculars

Which of the following might have forced a firm to cut prices?

• equilibrium in the market
• elasticity in the market
• a shortage in the market
• a surplus in the market

Why does a government place price ceilings such as rent control on some essential goods?

• to keep business people from making large profits
• to prevent inflation during boom times
• to reduce demand for these goods
• to keep these goods from becoming too expensive

On which of the following goods or services might a tax increase be hardest to pass on to customers?

• groceries
• automatic car washes
• gasoline
• prescription medication

Consumers rely on prices to help them

• choose among similar products.
• decide which products suit their lifestyle.
• find clothing that fits them best.
• discover the latest high-technology gadgets.

Who generally bears most of a sales tax when the demand for the good taxed is inelastic?

• the wholesaler
• the consumer
• the producer
• the retailer

Demand that is not very sensitive to a change in price is

• elastic
• inelastic
• unitary elastic

How are price ceilings and price floors similar?

• both represent input changes that affect demand
• both involve the government's setting of a maximum price
• both are examples of government price supports
• both bring about disequilibrium in the market

Elasticity of supply in the short run is usually 

• inelastic
• unitary elastic
• elastic