1. The equilibrium price of a good occurs when the a) quantity of the good deman

Question

1. The equilibrium price of a good occurs when the

a)quantity of the good demanded equals the quantity of the good supplied.

b)quantity of the good demanded is greater than the quantity of the good supplied.

c)quantity of the good demanded is less than the quantity of the good supplied.

d)demand for the good is equal to the supply of the good.

2. When economists talk about "optimal outcomes" in the marketplace, they mean that:

a)The allocation of resources by the market is perfect.

b)All consumer desires are satisfied and business profits are maximized.

c)the allocation of resources by the marker is likely to be the best possible, given scarce resources and income constraints.

d)Everyone who wants a good or service can get it.

3. Suppose that the price of lettuce used to produce tacos increases. As a result, the equilibrium price of a taco ________ and the equilibrium quantity __________.

a)rises; increases

b)rises; decreases

c)falls; increases

d)falls; decreases

4. A market driven economy is

a)chaotic and inefficient

b)well planned and highly efficient

c)not centrally planned but extremely efficient

d)centrally planned but not efficient

e)none of the above describes a market driven economy

5. During 2003 the supply of petroleum decreased while at the same time the demand for petroleum increased. If the magnitude of the increase in demand was greater than the magnitude of the decrease in supply, which of the following occurred?

a)the equilibrium price of gasoline increased and the equilibrium quantity increased.

b)the equilibrium price of gasoline increased and the equilibrium quantity decreased.

c)the equilibrium price of gasoline increased and the equilibrium quantity did not change.

d)the equilibrium price of gasoline decreased and the equilibrium quantity did not change.

Explanation / Answer

1b)quantity of the good demanded is greater than the quantity of the good supplied.

2c)the allocation of resources by the marker is likely to be the best possible, given scarce resources and income constraints.

3b)rises; decreases

4c)not centrally planned but extremely efficient

5d)the equilibrium price of gasoline decreased and the equilibrium quantity did not change.

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