LAP EC-906

What is the amount of money for which an item sells in the competitive marketplace?

• Value

• Price

• Market

• Utility

How much a consumer is willing to pay for a product depends partly on the consumer’s opinion of the product’s

• value.

• production costs.

•             efficiency.

• target market.

What is one factor that will determine how much a customer is willing to pay for a good
or service?

• Production costs

• Buying power

• Rationing

• Incentive

Which of the following is a business comparing when it analyzes the cost of buying wood desks versus the cost of buying metal desks:

• Incentives

• Excess demand

• Inflated price

• Relative price

Which of the following is an example of a change in the relative price ratio when the original price of red apples is 60¢ per pound and the original price of green apples is 80¢ per pound:

•             Red apples @ 30¢ per pound; green apples @ 40¢ per pound

• Red apples @ 90¢ per pound; green apples @ 80¢ per pound

• Red apples @ 45¢ per pound; green apples @ 60¢ per pound

• Red apples @ $1.20 per pound; green apples @ $1.60 per pound

How do producers answer the economic question of what to produce in a market economy?

• They produce products that are the most profitable.

• They produce products that provide the least incentives

• They produce products that cost them the most to produce.

• They produce products for which they have the most information.

To be able to charge competitive prices in our economy, producers must combine resources and technologies to produce

• limited quantities of goods.

• items to sell at relative prices.

• more than consumers will buy.

• items at the lowest cost possible.

What do consumers, producers, and resource owners need to have to make
economic decisions?

• Economic incentives

• Information about prices

• Rationing skills

• Limited liability

What are the incentives in our economy that encourage producers to change and reallocate their resources?

• Stocks

•             Consumers

• Profits

• Expansion

How are prices used in our economy?

• To ration limited resources

• To provide equilibrium in the market

• To encourage excess supply

• To encourage excess demand