Market Decision Making Quiz

What does the law of demand state?

• As the price of a good increases, the quantity demanded decreases.

• As the price of a good increases, the quantity demanded increases.

• As the price of a good decreases, the quantity demanded remains unchanged.

• As the price of a good decreases, the quantity supplied decreases.

What is producer surplus?

• The difference between what consumers are willing to pay and what they actually pay.

• The difference between the lowest price a firm would be willing to accept for a good and the price it actually receives.

• The total revenue a company earns from selling its products.

• The cost of producing goods.

What is market equilibrium?

• When the quantity of goods supplied is higher than the quantity of goods demanded.

• When the quantity of goods demanded is higher than the quantity of goods supplied.

• When the quantity of goods demanded equals the quantity of goods supplied.

• When the government intervenes to set the price of goods.

What is market power?

• The ability of a buyer to set the price of a good.

• The ability of all consumers to influence market prices.

• The ability of a seller to set the price of a good.

• The collective power of consumers to demand lower prices.

Which of the following is an example of anti-competitive behavior in markets?

• Price discrimination

• Perfect competition

• Price matching

• All of the above

What is the distinction between a movement along and a shift in the demand curve?

• A movement along the demand curve shows a change in the quantity demanded at every price.

• A shift in the demand curve shows a change in the quantity demanded at every price.

• A movement along the demand curve is caused by a change in price.

• A shift in the demand curve is caused by factors other than price.

What is the distinction between a movement along and a shift in the supply curve?

• A movement along the supply curve shows a change in the quantity supplied at every price.

• A shift in the supply curve shows a change in the quantity supplied at every price.

• A movement along the supply curve is caused by a change in price.

• A shift in the supply curve is caused by factors other than price.

What is a producer shortage?

• When the quantity of goods demanded is less than the quantity of goods supplied.

• When the quantity of goods supplied is less than the quantity of goods demanded.

• When producers are unable to meet the market demand at current prices.

• When producers supply more than what is demanded at current prices.

How do relative prices influence the market mechanism?

• They indicate the direction in which resources should be allocated.

• They have no influence on the market mechanism.

• They only affect the demand side of the market.

• They only affect the supply side of the market.

What happens to the producer surplus if the market price of a good increases?

• It decreases.

• It increases.

• It remains unchanged.

• It becomes negative.