Supply and Demand Test 1 SI 2020

What is the best replacement for Y?

• A. quantity demanded

• B. quota

• C. supply

• D. quantity supplied

A government can influence the economy by establishing barriers to a pure market economy. One such barrier is the minimum wage law, where there is a certain level at which all employees must be paid. The minimum wage law is an example of

• A. price floor.

• B. price ceiling.

• C. equilibrium price.

• D. opportunity cost.

What is the result of the price floor in the scenario shown in the graph?

• A. The supply of goods remains constant.

• B. The quantity demanded is equal to the quantity supplied.

• C. There is a surplus of available goods.

• D. There is a shortage of available goods.

What is the result of the price ceiling in the scenario shown in the graph?

• A. There is a surplus of available goods.

• B. The supply of goods remains the same.

• C. The quantity demanded is equal to the quantity supplied.

• D. There is a shortage of available goods.

The market clearing price is best defined as the price at which, for a given good or service,

• A. the quantity demanded is greater than the quantity supplied.

• B. the quality supplied is greater than the quality demanded.

• C. the quantity demanded equals the quantity supplied.

• D. the quality supplied equals the quality demanded.

One way the buyers and sellers interact to determine market clearing price is that

• A. buyers and sellers each seek the highest price.

• B. buyers seek the highest price while sellers seek the lowest price.

• C. buyers seek the lowest price while sellers seek the highest price.

• D. buyers and sellers each seek the lowest price.

The supply and demand chart above shows that the supply is greater than the demand when a price floor is established. Which of the following is an example of a price floor?

• A. The government sets a minimum wage for all employees.

• B. A state tells the electric utilities what rates they can charge their customers.

• C. The government sets the price for a gallon of gasoline.

• D. A city establishes rent controls in an attempt to have affordable housing.

Which best explains the law of demand?

• A. As the amount of a good increases, the price that consumers are willing to pay decreases.

• B. As the price of a good decreases, the amount that consumers are willing to purchase increases.

• C. As the price of a good decreases, the amount that consumers are willing to purchase decreases.

• D. As the amount of a good increases, the price that consumers are willing to pay increases.

The willingness of suppliers to sell product X at various prices is represented on the graph by

• A. line S.

• B. line D.

• C. point P1.

• D. point Q1.

Which of the following describes the situation that occurs when the equilibrium quantity has been reached?

• A. There is no surplus or shortage.

• B. One company has a monopoly.

• C. Prices are very high.

• D. There is a surplus.