Economic Practice quiz

The model of supply and demand explains how a perfectly competitive market operates.

Which of the following is a characteristic of a perfectly competitive market?

• The market has a very large number of firms.

• The market has very few buyers so firms have to compete for them

• In this market, large business firms produce large amounts of output and have a strong influence over price.

• All of the above

The demand schedule is

• A curve that shows the relationship between price and quantity demand, ceteris paribus.

• A table that shows the relationship between price and quantity demand, ceteris paribus.

• A list of time periods during which the quantity of a good is demanded.

• the order in which individual consumers arrive to demand a good or service.

Refer to the figure below. Which move best illustrates a change in quantity demanded?

• The move from b to c on the graph in the left side

• The move from b to d on the graph in the right side

• a combination of the two moves above

• none of the above

Which of the following will NOT cause a shift in the demand curve for houses?

• A decrease in income

• An increase in the price of condominiums

• A decrease in the price of houses

• A change in lifestyles so that people prefer living in apartments

Which of the following variables has an effect on the decisions of sellers, using the market for pizza as an example?

• Producer expectations about the future price of pizza

• the cost of the inputs used to produce the product, for example, wages paid to workers and the cost of the pizza oven

• the state of production technology, such as the knowledge used in making pizza

• all of the above

Refer to the figure below. Which of the following moves best describes a change in supply?

• It is best illustrated by the move from e to f on the graph on the left side.

• It is best illustrated by the move from e to g on the graph on the right side.

• Either move could apply; both illustrate a change in supply.

• A change in supply is actually a combination of the moves described in each graph

Refer to the figure below. If there are 100 identical pizzerias, how much is the quantity supplied when the market price equals $10?

• 400 pizzas

• 4 pizzas

• 40,000 pizzas

• 400,000 pizzas

Refer to the figure below. When market price equals $12, we have a situation called

• consumer protection

• market equilibrium

• excess demand

• excess supply

Refer to the figure below. After the increase in demand, at the initial price of $8, there is now

• Equilibrium

• excess quantity supplied

• excess quantity demanded

• a tendency for price to decrease.

Refer to the figure below. Which of the graphs best describes the impact of a decrease in the wages and input prices that firms must pay in orders to produce output?

• A

• B

• C

• D