TLE 5 Q4 Exam REVIEW

1) What is a market?

• a) A place where only buyers gather to purchase goods
• b) A place where goods and services are exchanged voluntarily
• c) A place where only sellers sell goods
• d) A place where prices are fixed and non-negotiable

2) What is the essence of markets?

• a) Scarcity of resources
• b) Voluntary exchange between buyers and sellers
• c) Government-imposed price controls
• d) Mandatory trading between participants

3) What happens to prices when there is a surplus of goods in the market?

• a) Prices increase
• b) Prices decrease
• c) Prices remain the same
• d) Prices become unstable

4) What does the Law of Demand state?

• a) When the price of a good increases, the quantity demanded increases
• b) When the price of a good increases, the quantity demanded decreases
• c) When the price of a good decreases, the quantity supplied decreases
• d) When the price of a good decreases, the quantity demanded increases

5) What does the Law of Supply state?

• a) When the price of a good increases, the quantity demanded increases
• b) When the price of a good increases, the quantity supplied decreases
• c) When the price of a good decreases, the quantity supplied increases
• d) When the price of a good increases, the quantity supplied increases

6) What is the equilibrium price in a market?

• a) The price at which the quantity demanded exceeds the quantity supplied
• b) The price at which the quantity supplied exceeds the quantity demanded
• c) The price at which the quantity demanded equals the quantity supplied
• d) The highest price that sellers are willing to accept

7) What is a surplus in a market?

• a) When the quantity demanded exceeds the quantity supplied
• b) When the quantity supplied exceeds the quantity demanded
• c) When the price of a good is at equilibrium
• d) When supply and demand curves are unaffected by external factors

8) What happens when there is a shortage in the market?

• a) The price decreases to attract more supply
• b) The price increases to decrease demand
• c) The price remains the same
• d) The supply curve shifts to the right

9) What external factors can shift the supply curve?

• a) Changes in consumer preferences
• b) Changes in weather or climate
• c) Changes in government policies
• d) All of the above

10) Why might markets need regulation in certain cases?

• a) To ensure that supply and demand are balanced
• b) To prevent exploitation and ensure fairness
• c) To control the pricing of all goods
• d) To increase competition between buyers