Price Systems

What is the main characteristic of prices in the market place?

• Fixed

• Neutral

• Favoring the consumer

• Favoring the producer

What happens to prices when an unforeseen event, such as war, occurs?

• They remain the same

• They decrease

• They increase

• They are adjusted to meet the unexpected situation

What is the basis for the efficiency of prices?

• Producer preferences

• Consumer preferences

• Supply and demand

• Government intervention

What does the equilibrium point on a demand and supply graph represent?

• Price where quantity demanded equals quantity supplied

• Price where quantity demanded exceeds quantity supplied

• Minimum price

• Maximum price

What happens when the price of a good is above the equilibrium level?

• No impact on demand

• No impact on supply

• Excess demand

• Excess supply

What does a surplus in the market lead to?

• Increase in prices

• Stable prices

• No impact on prices

• Decrease in prices

What is the effect of a below-equilibrium price on quantity demanded and quantity supplied?

• Quantity demanded exceeds quantity supplied

• Quantity supplied exceeds quantity demanded

• Quantity demanded equals quantity supplied

• No change in quantity demanded or supplied

What does a leftward shift in the supply curve indicate?

• No change in supply

• Increase in demand

• Decrease in supply

• Increase in supply

What is the overall effect of both decreased demand and decreased supply on equilibrium quantity?

• Increase

• Decrease

• No change

• Cannot be determined

What is the definition of economic efficiency?

• No impact on any party

• Imposing costs on one party without benefiting others

• Benefiting all parties equally

• Benefiting one party without imposing costs on others