Economics 6.2

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.

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.

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.

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.

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.

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.

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.

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 be about right.
• 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 about right under a bidding system.
• 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.