WorksheetsEconomics CBA #2
Total questions: 15
Worksheet time: 8mins
What is the law of supply and demand?
The price of a good or service is determined by the supply and demand for it in the market.
The law of supply and demand only applies to certain industries
The law of supply and demand is based on government regulations
Supply and demand have no impact on the price of goods and services
Define market equilibrium.
A state where the supply of goods exceeds the demand for those goods, resulting in a decrease in price.
A state where the supply of goods matches the demand for those goods, resulting in a stable price.
A state where the demand for goods exceeds the supply of those goods, resulting in an increase in price.
A state where the market is in chaos and unable to determine a stable price.
What are the characteristics of perfect competition?
Medium number of buyers and sellers, similar products, partial information, moderate entry and exit, and some market power
Huge number of buyers and sellers, unique products, no information, impossible entry and exit, and complete market power
Large number of buyers and sellers, identical products, perfect information, ease of entry and exit, and no market power
Small number of buyers and sellers, different products, imperfect information, difficult entry and exit, and market power
Explain the concept of monopoly in the market.
Multiple companies share control over a particular product or service
A single company or entity has complete control over a particular product or service
The market is regulated by the government to prevent any single company from having control
Monopoly refers to a situation where consumers have the power to dictate prices and production
What is an oligopoly and how does it affect the market?
An oligopoly is a market structure with a small number of firms having insignificant market power, leading to a highly competitive market.
An oligopoly is a market structure with a small number of firms having significant market power, affecting the market through limited competition and potential collusion.
An oligopoly is a market structure with no firms having market power, resulting in a perfectly competitive market.
An oligopoly is a market structure with a large number of firms having equal market power, leading to intense competition and low prices.
What happens to the price of a product when there is excess supply?
Price decreases
Price fluctuates
Price remains the same
Price increases
How does a shortage in supply affect the market price?
Market price tends to increase
Market price becomes unpredictable
Market price tends to decrease
Market price remains the same
What factors can shift the demand curve?
Changes in producer income
Weather conditions
Government regulations
Changes in consumer income, prices of related goods, consumer preferences, population demographics, and consumer expectations
What factors can shift the supply curve?
Changes in consumer preferences
Weather conditions
Currency exchange rates
Changes in production costs, technology, government policies, and expectations of future prices
Explain the concept of price elasticity of demand.
Price elasticity of demand measures the responsiveness of quantity demanded to a change in price.
Price elasticity of demand measures the availability of substitute products in the market.
Price elasticity of demand measures the impact of advertising on consumer demand.
Price elasticity of demand measures the responsiveness of quantity supplied to a change in price.
What are the advantages of a free market economy?
Monopoly, stagnation, inefficiency, and limited consumer choice
Government control, lack of innovation, high prices, and limited competition
Unemployment, inequality, lack of variety, and environmental degradation
Competition, innovation, efficiency, and consumer choice
What are the disadvantages of a free market economy?
Abundance of public goods
Competition and diversity in the market
Equal distribution of wealth
Inequality, lack of public goods, monopolies, externalities, and economic instability.
Differentiate between a sole proprietorship and a partnership.
Size of the business
Ownership structure
Number of employees
Location of the business
What are the characteristics of a corporation?
Limited liability, separate legal entity, perpetual existence, ability to raise capital through stock issuance
Unlimited liability, separate legal entity, temporary existence, ability to raise capital through stock issuance
Limited liability, individual legal entity, temporary existence, inability to raise capital through stock issuance
Unlimited liability, shared legal entity, temporary existence, inability to raise capital through stock issuance
Explain the concept of a partnership.
It involves a single individual working independently
An unincorporated association of two or more individuals to carry on a business for profit
A separate legal personality,
limited liability of its shareholders.
Centralised delegated management under a board structure
A business whereby the owner licenses its operations—along with its products, branding, and knowledge—in exchange for a fee.
