CHAP 4 PE Market Forces of Supply and Demand

What is the primary relationship described by the law of demand?

• When the price of a good remains constant, the quantity demanded changes.

• When the price of a good rises, the quantity demanded rises.

• When the price of a good falls, the quantity demanded falls.

• When the price of a good rises, the quantity demanded falls.

In a perfectly competitive market, what is true about buyers and sellers?

• They are price takers.

• They can influence the market price.

• They have limited choices.

• They can set their own prices.

What happens to the demand curve when there is an increase in demand?

• It remains unchanged.

• It shifts to the right.

• It shifts to the left.

• It becomes vertical.

What is a characteristic of a monopoly?

• No influence on price.

• One seller controls the market.

• Perfectly elastic demand.

• Many sellers in the market.

What does a demand schedule represent?

• The relationship between price and quantity supplied.

• The equilibrium price.

• The quantity demanded at various prices.

• The total market supply.

Which of the following can cause a shift in the supply curve?

• Change in the price of the good itself.

• Change in input prices.

• Change in consumer preferences.

• Change in the number of buyers.

What is the equilibrium price?

• The highest price consumers are willing to pay.

• The price at which quantity supplied equals quantity demanded.

• The price at which quantity supplied exceeds quantity demanded.

• The price at which quantity demanded exceeds quantity supplied.

What effect does a surplus have on market price?

• It increases the market price.

• It stabilizes the market price.

• It has no effect on the market price.

• It decreases the market price.

What is a normal good?

• A good for which demand decreases as income increases.

• A good for which demand increases as income increases.

• A good that has no substitutes.

• A good that is always in demand.

What happens to the quantity supplied when the price of a good rises?

• It remains the same.

• It decreases.

• It fluctuates randomly.

• It increases.