Chapter 4

The forces that make market economies work are

• price and quantity.

• demand and supply.

• the Senate and House of Representatives.

• the Constitution and the Bill of Rights.

Which of the following is NOT a characteristic of a perfectly competitive market?

• similar products

• numerous sellers

• market power

• numerous buyers

Buyers and sellers who have no influence on market price are referred to as

• price makers.

• market pawns.

• price takers.

• powerless.

There are thousands of wheat farmers who produce and sell wheat and there are millions of consumers who use wheat and wheat products. The market for wheat would be considered

• oligopolistic.

• monopolistic.

• perfectly competitive.

• monopolistically competitive.

A market with only a few sellers would be

• a monopoly.

• an oligopoly.

• a competitive market.

• a monopolistically competitive market.

If Francis receives a decrease in his pay, we would expect

• Francis's demand for each good he purchases to remain unchanged.

• Francis's demand for normal goods to increase.

• Francis's demand for luxury goods to increase.

• Francis's demand for inferior goods to increase.

You lose your job and as a result you buy fewer mystery books. This shows that you consider mystery books to be a/an

• normal good.

• inferior good.

• luxury good.

• complementary good.

If the price of a substitute to good X increases, then the

• demand for good X will decrease.

• market price of good X will decrease.

• demand for good X will increase.

• quantity demanded for good X will increase.

Two goods are complements if a decrease in the price of one good

• increases the quantity demanded of the other good.

• reduces the demand for the other good.

• reduces the quantity demanded of the other good.

• raises the demand for the other good.

An example of substitute goods would be

• butter and margarine.

• tennis balls and tennis rackets.

• televisions and tractors.

• peanut butter and jelly.