Markets and Efficiency - week 3

Which of the following best describes the law of demand?

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

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

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

• There is no relationship between the price of a good and the quantity demanded.

What is market equilibrium?

• The point where supply exceeds demand.

• The point where demand exceeds supply.

• The point where quantity demanded equals quantity supplied.

• The point where prices are highest.

If the price elasticity of demand for a product is greater than 1, the demand is considered:

• Inelastic

• Elastic

• Unitary elastic

• Perfectly inelastic

Consumer surplus is defined as:

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

• The difference between what producers are willing to accept and what they actually receive.

• The total revenue received by producers.

• The total cost incurred by producers.

Producer surplus is:

• The difference between the market price and the minimum price at which producers are willing to sell.

• The total cost of production.

• The total revenue minus total cost.

• The difference between the highest price consumers are willing to pay and the market price.

Which of the following is an example of market failure?

• Perfect competition

• Externalities

• Market equilibrium

• Consumer surplus

In a product market, which of the following is traded?

• Labour

• Capital

• Goods and services

• Land

In a factor market, which of the following is traded?

• Finished goods

• Services

• Factors of production

• Consumer goods

Which of the following best describes perfect competition?

• A market structure with a single seller.

• A market structure with many sellers and buyers, where no single entity can influence the market price.

• A market structure with a few large sellers.

• A market structure with differentiated products.

What happens to the equilibrium price if there is an increase in demand while supply remains constant?

• The equilibrium price decreases.

• The equilibrium price remains the same.

• The equilibrium price increases.

• The equilibrium price becomes zero.