Chapter 5 Market-Clearing Price

What makes prices go up and down?

• demand

• supply

• market forces

• all of the above

What guides buyers' choice in a market economy?

• supply costs

• price

• an auction

• all of the above

Demand means consumers buy less as price go up and buy less as price goes down.

• true

• false

Supply means __________ sell __________ as price goes up and sell _________ as price goes down.

• producers, more, more

• consumers, more, less

• producers, more, less

• consumers, less, more

The market-clearing price or equilibrium price is the price in which sellers want to sell as much as buyers want to buy.

• True

• False

At the equilibrium price quantity demanded = quantity supplied.

• true

• false

In reality, quantity supplied = quantity demanded when _______________________ is in effect.

• never

• always

• ceteris parabus

• market competition

What moves price towards the market clearing price in the hotel industry?

• price

• quantity

• ceteris parabus

• market competition

The invisible hand, according to Adam Smith, means that in a free market or capitalist society

• people are self-interested

• the free market effectively allocates goods and services

• there will be prosperity

• all of the above

When consumers want to buy more than producers have available to sell there is a

• market surplus

• market shortage

• all of the above

• none of the above