1. The ability of a market to reach an equilibrium may be interrupted and a permanent shortage result when the government intervenes in the market and sets a:
A. Minimum price (that is, a price floor) above the equilibrium price. B. Not enough information has been provided to determine a correct response. C. Maximum price (that is, a price ceiling) above the equilibrium price. D. Maximum price (that is, a price ceiling) below the equilibrium price. E. Minimum price (that is, a price floor) below the equilibrium price.
2. When an economist says “economics is the study of scarcity,” she is referring to how a society makes the best use of its:
A. Limited resources in order to insure a fair price and full employment of all resources.
B. Limited resources in order to best satisfy its unlimited desires (or wants).
C. Limited desires (or wants) in order to best utilize its unlimited resources.
D. Unlimited resources in order to best satisfy its limited desires (or wants).
E. Unlimited desires (or wants) in order to best utilize its unlimited resources.