1. Which of the following statements is correct?
a.
Buyers determine supply, and sellers determine demand.
b.
Buyers determine demand, and sellers determine supply.
c.
Buyers determine both demand and supply.
d.
Sellers determine both demand and supply.
2. The demand for a good or service is determined by
a.
b.
c.
d.
3. The supply of a good or service is determined by
a.
b.
c.
d.
4. A group of buyers and sellers of a particular good or service is called a(n)
a.
coalition.
b.
economy.
c.
market.
d.
competition.
5. For a market for a good or service to exist, there must be a
a.
group of buyers and sellers.
b.
specific time and place at which the good or service is traded.
c.
high degree of organization present.
d.
All of the above are correct.
6. Which of the following is an example of a highly organized market?
a.
the market for textbooks
b.
the market for spa services
c.
the market for soybeans
d.
the market for ice cream
7. Which of the following is an example of a less-than-highly-organized market?
a.
the market for U.S. Treasury bonds
b.
the market for corn
c.
the market for soybeans
d.
the market for ice cream
8. Which of the following is an example of a market?
a.
a gas station
b.
a garage sale
c.
a barber shop
d.
All of the above are examples of markets.
9. The market for ice cream is a
a.
monopolistic market.
b.
highly competitive market.
c.
highly organized market.
d.
Both b and c are correct.
10. Most markets in the economy are
a.
markets in which sellers, rather than buyers, control the price of the product.
b.
markets in which buyers, rather than sellers, control the price of the product.
c.
perfectly competitive.
d.
highly competitive.
11. A market includes
a.
buyers only.
b.
sellers only.
c.
both buyers and sellers.
d.
the place where transactions occur but not the people involved.
12. Which of the following is not an example of a market?
a.
A small town has only one seller of electricity.
b.
In the United States, a sick person cannot legally purchase a kidney.
c.
In Florida, there are many buyers and sellers of key lime pie.
d.
The availability of Internet shopping has expanded the clothing choices for buyers who do not live near large
cities.
13. In a competitive market, the price of a product
a.
is determined by buyers, and the quantity of the product produced is determined by sellers.
b.
is determined by sellers, and the quantity of the product produced is determined by buyers.
c.
and the quantity of the product produced are both determined by sellers.
d.
None of the above is correct.
14. In a competitive market, the quantity of a product produced and the price of the product are determined by
a.
buyers.
b.
sellers.
c.
both buyers and sellers.
d.
None of the above is correct.
15. In a competitive market, the quantity of a product produced and the price of the product are determined by
a.
a single buyer.
b.
a single seller.
c.
one buyer and one seller working together.
d.
all buyers and all sellers.
16. A competitive market is a market in which
a.
an auctioneer helps set prices and arrange sales.
b.
there are only a few sellers.
c.
the forces of supply and demand do not apply.
d.
no individual buyer or seller has any significant impact on the market price.
17. A competitive market is one in which there
a.
is only one seller, but there are many buyers.
b.
are many sellers, and each seller has the ability to set the price of his product.
c.
are many sellers, and they compete with one another in such a way that some sellers are always being forced
out of the market.
d.
are so many buyers and so many sellers that each has a negligible impact on the price of the product.
18. Assume Diana buys computers in a competitive market. It follows that
a.
Diana has a limited number of sellers to turn to when she buys a computer.
b.
Diana will find herself negotiating with sellers whenever she buys a computer.
c.
if Diana buys a large number of computers, the price of computers will rise noticeably.
d.
None of the above is correct.
19. Assume Leo buys coffee beans in a competitive market. It follows that
a.
Leo has a limited number of sellers from which to buy coffee beans.
b.
Leo will negotiate with sellers whenever he buys coffee beans.
c.
Leo can influence the price of coffee beans if he buys a large quantity of them.
d.
None of the above is correct.
20. Assume Leo buys coffee beans in a competitive market. It follows that
a.
Leo has a limited number of sellers from which to buy coffee beans.
b.
Leo will negotiate with sellers whenever he buys coffee beans.
c.
Leo cannot influence the price of coffee beans even if he buys a large quantity of them.
d.
None of the above is correct.
21. In a competitive market, each seller has limited control over the price of his product because
a.
other sellers are offering similar products.
b.
buyers exert more control over the price than do sellers.
c.
these markets are highly regulated by the government.
d.
sellers usually agree to set a common price that will allow each seller to earn a comfortable profit.
22. For a competitive market,
a.
a seller can always increase her profit by raising the price of her product.
b.
if a seller charges more than the going price, buyers will go elsewhere to make their purchases.
c.
a seller often charges less than the going price to increase sales and profit.
d.
a single buyer can influence the price of the product but only when purchasing from several sellers in a short
period of time.
23. If a seller in a competitive market chooses to charge more than the going price, then
a.
the sellers’ profits must increase.
b.
the owners of the raw materials used in production would raise the prices for the raw materials.
c.
other sellers would also raise their prices.
d.
buyers will make purchases from other sellers.
24. In competitive markets, buyers
a.
are price takers, but sellers are price setters.
b.
are price setters, but sellers are price takers.
c.
and sellers are price takers.
d.
and sellers are price setters.
25. The term price takers refers to buyers and sellers in
a.
perfectly competitive markets.
b.
monopolistic markets.
c.
markets that are regulated by the government.
d.
markets in which buyers cannot buy all they want and/or sellers cannot sell all they want.
26. In competitive markets,
a.
firms produce identical products.
b.
no individual buyer can influence the market price.
c.
no individual seller can influence the market price.
d.
All of the above are correct.
27. In competitive markets, which of the following is not correct?
a.
Firms produce identical products.
b.
No individual buyer can influence the market price.
c.
Some sellers can set prices.
d.
Buyers are price takers.
28. In competitive markets,
a.
firms produce identical products.
b.
buyers can influence the market price more easily than sellers.
c.
markets are more likely to be in equilibrium.
d.
sellers are price setters.
29. The highest form of competition is called
a.
absolute competition.
b.
cutthroat competition.
c.
perfect competition.
d.
market competition.
30. The highest form of competition is called
a.
arbitrage.
b.
monopolistic competition.
c.
equilibrium.
d.
perfect competition.
31. Which of the following is not a characteristic of a perfectly competitive market?
a.
Different sellers sell identical products.
b.
There are many sellers.
c.
Sellers must accept the price the market determines.
d.
All of the above are characteristics of a perfectly competitive market.
32. Which of the following is not a characteristic of a perfectly competitive market?
a.
Sellers set the price of the product.
b.
There are many sellers.
c.
Buyers must accept the price the market determines.
d.
All of the above are characteristics of a perfectly competitive market.
33. Buyers and sellers who have no influence on market price are referred to as
a.
market pawns.
b.
monopolists.
c.
price takers.
d.
price setters.
34. When all market participants are price takers who have no influence over prices, the markets have
a.
only a few buyers and sellers.
b.
numerous sellers but only a few buyers.
c.
numerous buyers but only a few sellers.
d.
numerous buyers and sellers.
35. If buyers and sellers in a certain market are price takers, then individually
a.
they have no influence on market price.
b.
they have some influence on market price but that influence is limited.
c.
buyers will be able to find prices lower than those determined in the market.
d.
sellers will find it difficult to sell all they want to sell at the market price.
36. In a perfectly competitive market, at the market price, buyers
a.
cannot buy all they want, and sellers cannot sell all they want.
b.
cannot buy all they want, but sellers can sell all they want.
c.
can buy all they want, but sellers cannot sell all they want.
d.
can buy all they want, and sellers can sell all they want.
37. An example of a perfectly competitive market would be the
a.
cable TV market.
b.
soybean market.
c.
breakfast cereal market.
d.
shampoo market.
38. An example of a perfectly competitive market would be the market for
a.
tennis racquets.
b.
pizza.
c.
garbage collection.
d.
wheat.
39. An example of a perfectly competitive market would be the market for
a.
electricity.
b.
soybeans.
c.
coffee shops.
d.
restaurants.
40. Assume a market is perfectly competitive. When a new producer enters the market, the
a.
price in the market increases.
b.
price in the market decreases.
c.
price in the market does not change.
d.
market is no longer a competitive market.
41. Which of the following characteristics is required for a perfectly competitive market?
a.
The goods offered for sale are exactly the same.
b.
There are so many buyers and sellers that no single buyer or seller has any influence over the market price.
c.
It is difficult for new sellers to enter the market.
d.
Both a and b are correct.
42. Which of the following is the least likely to be a competitive market?
a.
ice cream
b.
soybeans
c.
cable television
d.
new houses
43. Assume the market for tennis balls is perfectly competitive. When one tennis ball producer exits the market,
a.
the price of tennis balls increases.
b.
the price of tennis balls decreases.
c.
the price of tennis balls does not change.
d.
there is no longer a market for tennis balls.
44. Assume the market for pork is perfectly competitive. When one pork buyer exits the market,
a.
the price of pork increases.
b.
the price of pork decreases.
c.
the price of pork does not change.
d.
there is no longer a market for pork.
45. Which of the following is not a reason perfect competition is a useful simplification, despite the diversity of market
types we find in the world?
a.
Perfectly competitive markets are the easiest to analyze because everyone participating in the market takes the
price as given by market conditions.
b.
Some degree of competition is present in most markets.
c.
There are many buyers and many sellers in all types of markets.
d.
Many of the lessons that we learn by studying supply and demand under perfect competition apply in more
complicated markets as well.
46. If a firm is a price taker, it operates in a
a.
competitive market.
b.
monopoly market.
c.
oligopoly market.
d.
monopolistically competitive market.
47. A monopoly is a market with one
a.
seller, and that seller is a price taker.
b.
seller, and that seller sets the price.
c.
buyer, and that buyer is a price taker.
d.
buyer, and that buyer sets the price.
48. Which of the following would most likely serve as an example of a monopoly?
a.
a bakery in a large city
b.
a bank in a large city
c.
a local cable television company
d.
a small group of corn farmers
49. Which of the following would most likely serve as an example of a monopoly?
a.
a restaurant in a large city
b.
a dry cleaners in a large city
c.
a local gas station
d.
a local electrical company