Questions:
1.Revenue increases when
Part A.
producer surplus increases
Part B.
producer surplus decreases
Part C.
consumer surplus increases
Part D.
consumer surplus decreases
2. An increase in the price of an inelastic good
Part A.
decreases revenues
Part B.
decreases the percentage change in quantity less than the percentage change in price
Part C.
increases revenues
Part D.
increases the percentage change in quantity more than the percentage change in price
3. Price elasticity of Demand increases when
Part A.
the number of complementary goods decreases
Part B.
the number of substitute goods decreases
Part C.
people become more price sensitive over time
Part D.
people become less price sensitive over time
4.The purpose of a market in a market system is to
Part A.
allow government to control what is sold
Part B.
set constraints between buyers and sellers
Part C.
bring buyers and sellers into contact
Part D.
allow an organization to set prices in relation to their products
5.By specializing in the production of one good, a company is able to benefit from economies of scale which increases its revenue. Which of the following is an attribute of specialization?
Part A.
Reducing costs by creating a surplus
Part B.
Saving time by allowing a worker to focus on one task
Part C.
Encouraging workers to learn new skills
Part D.
Encouraging workers to learn a number of different skills
6 . The market system promotes progress by
Part A.
creating incentive to continue to do things in the same way
Part B.
restricting the amount of capital directed to specific goods
Part C.
slowly adjusting to changes in the prices of resources
Part D.
providing incentive for technological advances
7.Productive efficiency is achieved when
Part A.
the most valued combination of resources is used
Part B.
the best technology is used
Part C.
when production occurs at a fair cost per unit
Part D.
fewer resources are left for production of other goods
8.The market is said to be in equilibrium when
Part A.
there is potential for a shortage but not a surplus
Part B.
there is potential for a surplus but not a shortage
Part C.
neither a shortage nor a surplus exists
Part D.
the quantity sold equals the quantity purchased
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9.The market will move to a higher equilibrium price if
Part A.
the decrease in supply is equal to the decrease in demand
Part B.
the increase in supply is greater than the increase in demand
Part C.
the decrease in demand is greater than the decrease in supply
Part D.
the increase in demand is greater than the increase in supply
10.The intersection of supply and demand will be at a lower equilibrium price but a higher equilibrium quantity if
Part A.
supply is constant and demand increases
Part B.
supply is constant and demand decreases
Part C.
demand is constant and supply decreases
Part D.
demand is constant and supply increases
11.When a price ceiling occurs
Part A.
the market price will be lower than the equilibrium price
Part B.
the market price will be higher than the equilibrium price
Part C.
the supply will exceed the demand
Part D.
buyers will not be willing to pay more than the ceiling price
12.Because the goals of firms, entrepreneurs, and workers have different incentives, which of the following principles applies?
Part A.
Self-interest
Part B.
Invisible hand
Part C.
Moral hazard
Part D.
Free enterprise