What is a key characteristic of the process that makes a transaction voluntary in a competitive market?

The process is competitive and voluntary.

Buyers are forced to pay a fixed price.

Sellers dictate prices without buyer consent.

The government regulates every transaction.

Buyers are required to purchase at a set price.

What does the bidding system ensure about the price in a competitive market?

The price will always be extremely high.

The price will always be extremely low.

The price will be determined by the highest bidder.

The price will be set without regard to competition.

According to most economists, what happens when the transaction is voluntary and competitive?

The price will be unfairly set by buyers.

The price will always be determined by the seller alone.

The transaction will not happen if the price is too high.

The price will be set arbitrarily by government officials.

What must be true for the compromise between buyers and sellers to occur in a market economy?

The compromise must be to the benefit of both buyers and sellers.

The compromise must favor the seller.

The compromise must favor the buyer.

The compromise must only benefit the government.

The compromise must be forced upon the parties.

What is the purpose of the supply and demand illustration in the text?

It shows how the adjustment process works in a market economy.

It shows how sellers can always dictate prices.

It shows how government regulations impact prices.

It predicts consumer behavior without considering supply.

It illustrates the impact of fixed prices on the market.

What does the figure in the text help illustrate?

It helps us analyze behavior and predict outcomes using an economic model.

It shows the cost of producing goods in a market economy.

It predicts government spending patterns.

It shows global trade patterns.

It analyzes the relationship between wages and employment.

What does the data in the figure represent?

The demand for and supply of CDs at various prices.

The total cost of producing CDs.

The relationship between price and consumer satisfaction.

The total sales of CDs in different regions.

The inflation rate affecting CD prices.

What is Panel A in the figure a combination of?

The market demand schedule and the market supply schedule.

The demand curve and the price elasticity curve.

The demand schedule and total consumer expenditures.

The production cost schedule and the market equilibrium price.

The supply curve and wage rate schedule.

What does Panel B of the figure show?

Both the market demand curve and the market supply curve.

The total supply of CDs in the market.

The relationship between prices and producer profits.

The government’s price control policies.

The consumer satisfaction curve.

What does each graph separately represent in the figure?

Each graph represents either the demand or supply side of the market.

Each graph shows the production cost of a good.

Each graph shows the price set by the government.

Each graph shows the number of consumers in the market.

Each graph represents consumer preferences only.

What does the combination of the supply and demand curves result in?

A complete model of the market.

A prediction of government policy.

A production schedule for the market.

What does the intersection of the supply and demand curves represent?

The price set by the government.

The average market price over time.

The maximum price that can be charged.

The price that only benefits producers.

What is the equilibrium price?

The price at which the number of units produced equals the number of units sold.

The price that buyers are willing to pay.

The price that sellers are willing to accept.

The price where no one is willing to negotiate.

The average price over a set period of time.

What does the equilibrium price mean in terms of product availability?

There is neither a surplus nor a shortage of the product in the market.

There is always a surplus of the product.

There is always a shortage of the product.

The product is unavailable in the market.

The product’s price will fluctuate continuously.

Why is it important to examine the reactions of buyers and sellers to different market prices?

To understand how the market reaches the equilibrium price.

To determine the profit margins of sellers.

To predict the government’s involvement in pricing.

To find the best price for consumers alone.

To eliminate competition in the market.

What assumption do economists make when examining the reactions of buyers and sellers to different market prices?

Neither the buyer nor the seller knows the final price.

Buyers always know the final price.

Sellers always know the final price.

Both buyers and sellers know the exact price beforehand.

Buyers and sellers fix prices together in advance.

How do economists propose finding the equilibrium price?

By relying on government price regulations.

By setting minimum price limits.

By asking buyers to set the price.

What happens when the quantity supplied is greater than the quantity demanded at a given price?

The market reaches equilibrium.

The suppliers reduce production.

How is the 10-unit surplus represented in the figure?

As the difference between the quantity supplied and the quantity demanded at $25.

As the quantity of products available in warehouses.

As the price difference between buyers and sellers.

As the total amount of demand at a lower price.

As a horizontal shift in the demand curve.

Where is the surplus shown graphically in the figure?

In Panel A of Figure 6.2 as the horizontal distance between the supply and demand curves.

In Panel A of Figure 6.1 as the vertical distance between the price and quantity.

In Panel B as a shift in the demand curve.

In Panel C as the difference in total sales.

In Panel A as a vertical line at $25.

What happens to the surplus on Day 1?

It shows up as unsold products on suppliers’ shelves.

It gets sold at a higher price.

It is stored in warehouses for future use.

It gets redistributed to other sellers.

What do sellers realize after discovering the surplus on Day 1?

They realize that $25 is too high and must lower their price.

They realize that $25 is the optimal price.

They decide to stop selling CDs.

They must increase production to meet demand.

They realize that no price adjustment is needed.

What is the expected outcome after a surplus in the market?

The price goes up dramatically.

The price is fixed by the government.

How far do economists expect the price to go down after a surplus?

The price will go down a little if the surplus is small and much more if the surplus is large.

The price will go down drastically in all cases.

The price will remain unchanged regardless of the surplus size.

The price will increase after a surplus.

The price will stabilize at $25.

What happens when the quantity demanded is greater than the quantity supplied at a given price?

The market reaches equilibrium.

Suppliers stop selling the product.

What is the result of a shortage in the market?

Producers have no more CDs to sell and wish they had charged a higher price.

Producers sell all their products at the given price.

The price is reduced to attract more buyers.

Consumers are unwilling to pay the price.

The product is taken off the market.

What happens as a result of a shortage?

Both the price and the quantity supplied will go up.

The price and the quantity demanded will go down.

The price remains the same, but supply increases.

The price increases while supply decreases.

The price decreases while demand increases.

How much will the price go up in response to a shortage, according to the model?

The price will go up, but it will be less than $25.

The price will rise dramatically.

The price will stabilize at $10.

The price will be fixed by producers.

The price will remain unchanged.

What will happen if the price drops to $15?

The market will have found its equilibrium price.

The price will continue to fall.

What is the equilibrium price?

The price that clears the market by leaving neither a surplus nor a shortage.

The price where demand is greater than supply.

The price set by the government.

The price that maximizes profit for sellers.

The price where supply exceeds demand.

How does the economic model of the market predict the approach to equilibrium?

Surpluses and shortages push the price toward equilibrium.

The price stays fixed until equilibrium is reached.

The price increases continuously.

The price decreases continuously.

What happens when the price is too high in the market?

The surplus will tend to force the price down.

The quantity supplied will decrease.

The quantity demanded will decrease.

What happens when the price is too low in the market?

The shortage will tend to force the price up.

The price will remain constant.

The quantity supplied will increase.

The quantity demanded will increase.

What is the result when the equilibrium price of $15 is finally reached?

The price will tend to remain there.

The price will fluctuate unpredictably.

The supply will exceed the demand.

The price will continue to rise.

What could disturb the equilibrium once the price reaches $15?

New shortages, new surpluses, or both.

Increased government intervention.

A sudden drop in consumer demand.

The price being fixed by the government.

How would it be more difficult to reach equilibrium without markets?

Without markets, it would be hard to set the equilibrium price and quantity.

Equilibrium prices would be set by the government.

Suppliers would control all pricing decisions.

Demand would dictate the equilibrium.

Prices would always remain fixed.

Economics 6.2

Authored by Justin Beyersdorfer

Social Studies

12th Grade

Used 2+ times

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91 questions

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is one of the most appealing features of a competitive market economy?

Everyone who participates has a hand in determining prices.

The government controls the prices.

Buyers and sellers have equal power in setting prices.

Prices are set by a central authority.

Sellers alone determine prices.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Why do economists consider prices to be neutral and impartial?

Prices are determined by the interaction of buyers and sellers.

Prices are set by the government.

Buyers and sellers always agree on prices.

Only buyers determine prices.

Sellers control the prices in the market.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What can complicate or make the process of establishing a price contentious?

Buyers and sellers have opposite hopes and desires.

Buyers and sellers agree on the ideal price.

Sellers always agree with each other on prices.

There is no competition in setting prices.

Buyers and sellers can easily reach a compromise.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What do buyers want when determining prices?

Buyers want to find good buys at low prices.

Buyers want to set the highest possible price.

Buyers wish to pay average market prices.

Buyers hope for high profits from sales.

Buyers expect to sell products at a premium price.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What do sellers hope for when determining prices?

Sellers hope for high prices and large profits.

Sellers want to pay the lowest possible price.

Sellers desire to sell at average market prices.

Sellers expect to lower prices to attract more customers.

Sellers aim for a price below their costs.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is necessary to reach a compromise between buyers and sellers?

Some adjustment is necessary.

Both parties must agree on a fixed price.

The price is set by the government.

Buyers must accept sellers’ prices without negotiation.

Sellers must drastically reduce their prices.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What do most economists argue regarding the price of tickets in a competitive market?

The price will be about right under a bidding system.

The price will be set by the government.

The price will be determined by the lowest bidder.

Buyers will always pay the highest price they’re willing to.

Sellers will set prices regardless of competition.

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