CHAPTER 4 - MICRO

The forces that make market economies work are

• price and quantity.

• demand and supply.

• the Senate and House of Representatives.

• the Constitution and the Bill of Rights.

Which of the following are the words most commonly used by economists?

• surplus and shortage

• scarcity and human wants

• supply and demand

• price and quantity

One result of a drought in the midwest could be an increase in

• farm machinery prices.

• the price of diesel fuel used in farming.

• migrant farm workers’ wages.

• the price of frosted shredded wheat.

In a free market, who determines how much of a good will be sold and the price at which it is sold?

• suppliers

• demanders

• the government

• suppliers and demanders together

A market is a

• group of demanders and suppliers of a particular good or service.

• group of people with common desires.

• place where only sellers meet.

• place where only buyers come together.

The behavior of people as they interact with one another in markets is referred to as

• economics.

• interaction.

• demand and supply.

• social psychology.

Which of the following is true?

• Buyers determine supply and sellers determine demand.

• Buyers determine demand and sellers determine supply.

• Buyers and sellers as one group determine supply.

• Buyers and sellers as one group determine demand.

For each good produced in a market economy, demand and supply determine

• the price of the good, but not the quantity.

• the quantity of the good, but not the price.

• both price and quantity.

• neither price nor quantity is determined by demand and supply, because prices are ultimately set by producers.

In a market economy,

• demand is determined by supply.

• supply is determined by demand.

• price is determined by quantity.

• quantity is determined by price.

• Either a or b are correct, depending on the product.

Who is it that ultimately determines the demand for a product or service?

• those who buy the product or service

• the government

• the producers who create the product or service

• those who supply the raw materials used in the production of the good or service