Microeconomics Quiz-1

What is market equilibrium?

• When supply exceeds demand

• When demand exceeds supply

• When prices are fixed by the government

• When quantity supplied equals quantity demanded

What is the effect of a subsidy?

• Reduces demand for goods

• Lowers prices for consumers

• Decreases the quantity supplied

• Increases production costs

What does market elasticity measure?

• The total supply in the market

• The responsiveness of quantity demanded or supplied to changes

• The overall market demand

• The fixed price of goods

What is the impact of taxes on supply?

• Shifts the supply curve downward

• Shifts the supply curve upward

• Increases quantity supplied

• Decreases consumer prices

What is the role of government in market control?

• To eliminate all market competition

• To set prices for all goods

• To ensure maximum profits for producers

• To correct market failures and achieve social objectives

What is the effect of consumer expectations on demand?

• They only increase demand

• They have no effect on demand

• They can increase or decrease current demand

• They only decrease demand

What is the impact of a surplus in the market?

• Prices will increase

• Prices will decrease

• Demand will increase

• Supply will decrease

Price ceiling is a legal maximum on the price of a good or service. What is the example of price selling?

• Minimum wage laws
• Sales tax on goods
• Rent control

• Subsidies for farmers

Price floor: a legal minimum on the price of a good or service. Example:

• Minimum wage
• Subsidy
• Sales tax
• Price ceiling

Price controls are often intended to help the poor, but they often hurt more than help them. Why?

• Price controls can create shortages and reduce availability of goods, harming the poor.
• Price controls always lower prices for everyone.
• Price controls guarantee that everyone can afford basic necessities.
• Price controls increase the quality of goods available.