Unit 5 Test

What happens in the market at the equilibrium price?

• The demand exceeds supply.

• The market is in balance with no shortages or surpluses.

• There is a shortage of goods.

• There is a surplus of goods.

What is the basis for the allocation of goods and services according to the price mechanism?

• The highest price consumers are willing to pay

• The cost of production

• The average price in the market

• The lowest price consumers are willing to pay

How do consumer characteristics like preferences and purchasing power affect the popularity of a new smartphone model in the market?

• Technological advancements

• Consumer preferences and purchasing power

• Producer costs

• Government regulations

Grace runs a small bakery and notices that she has baked more cupcakes than her customers are buying. What is a characteristic of this surplus?

• Downward pressure on prices

• Increase in demand

• Upward pressure on prices

• No change in prices

What is a disadvantage of the price-based allocation of goods and services?

• It can exclude those unable to afford high prices

• It causes inflation

• It leads to overproduction

• It reduces consumer choice

During a hot summer, the demand for ice cream increases significantly. What do ice cream suppliers tend to do in response to this shortage?

• Stop production

• Increase production or raise prices

• Decrease production

• Lower prices

How do higher prices affect the quantity demanded?

• Cause the quantity demanded to fluctuate

• Increase the quantity demanded

• Have no effect on the quantity demanded

• Decrease the quantity demanded

In a school cafeteria, what is an advantage of the "First-Come, First-Served" method for serving lunch?

• It is fair to everyone.

• It ensures equal distribution.

• It is complex to implement.

• It is simple and easy to implement.

What is a characteristic of a shortage?

• Downward pressure on prices

• Decrease in demand

• Upward pressure on prices

• Leads to surplus

What is a consumer?

• A person who produces goods and services

• A company that sells products

• An individual or group that uses goods and services produced within an economy

• A government entity that regulates markets