Economics Quiz: Markets and Market Failure

What is the definition of the economic problem?

• The unlimited wants of consumers

• The role of government in the economy

• The scarcity of resources

• The equilibrium of supply and demand

Which of the following is a factor of production?

• Labour

• Price

• Demand

• Money

What is the shape of the demand curve?

• Vertical

• Horizontal

• Downward sloping

• Upward sloping

What will cause a shift in demand?

• Change in price

• Change in income

• Change in supply

• Change in technology

What is the formula for Price Elasticity of Demand (PED)?

• (Total revenue / Quantity demanded)

• (Change in price / Change in quantity demanded)

• (Income / Price)

• (Change in quantity demanded / Change in price)

What does a Price Elasticity of Demand (PED) value of -9 indicate?

• Inelastic demand

• Elastic demand

• Unitary demand

• Perfectly elastic demand

What is the significance of Cross Elasticity of Demand (XED) to governments' and firms' revenue and sales?

• It measures the responsiveness of quantity demanded to a change in the cost of production

• It measures the responsiveness of quantity demanded to a change in the price of another good

• It measures the responsiveness of quantity demanded to a change in income

• It measures the responsiveness of quantity demanded to a change in price

If a good is a luxury item, this has implications for its...

• Income Elasticity of Demand (YED)

• Cross Elasticity of Demand (XED)

• Price Elasticity of Supply (PES)

• Price Elasticity of Demand (PED)

What is the definition of consumer surplus?

• The total cost incurred by consumers in the market

• The total revenue generated by consumers in the market

• The extra cost consumers pay for a higher price than they are willing to pay

• The extra benefit consumers receive from paying a lower price than they are willing to pay

What leads to market failure in the context of externalities?

• Private costs and benefits

• Social costs and benefits

• Monopoly power

• External costs and benefits