The effect of Prices

Price is defined as the ___________________ value of an object

• Monetary

• Real

• Fiscal

A particular price on an item might provide a(n) ___________________ for a change in economic behavior by a buyer or seller

• flexibility

• Efficiency

• Signal

In a competitive market economy, prices are ___________________because they favor neither the producer nor the consumer

• Efficient

• Familiar

• Neutral

Which of these best describes prices in a market economy?

• a signal for consumers to purchase less

• a signal for producers to manufacture less

• a set of compromises between buyers and sellers

Prices are the result of competition between whom?

• Producers and consumers

• Consumers and buyers

• Producers and sellers

If bad weather caused a smaller than usual harvest of corn one year, what would happen to the price of corn?

• It would stay the same.

• It would decrease

• It would increase.

What do prices signal to consumers?

• How much to buy

• How much to make

• What to produce

How do prices help provide flexibility?

• By helping sellers maintain production despite changes in demand

• By helping buyers and sellers adjust their levels of consumption and production when any events occur

• By helping buyers and sellers sell more

Which of the following characteristics of prices reflect that there are no waste of resources attached to using prices?

• Neutral

• Flexible

• Efficient

Which of these tends to force the price of an item downward?

• . a surplus of that item

• a shortage of that item

• . attainment of an equilibrium price for that item