1. The two words most often used by economists are
a.
prices and quantities.
b.
resources and allocation.
c.
supply and demand.
d.
efficiency and equity.
2. The two words economists use most often are
a.
b.
c.
d.
3. The forces that make market economies work are
a.
work and leisure.
b.
politics and religion.
c.
supply and demand.
d.
taxes and government spending.
4. In a market economy, supply and demand determine
a.
both the quantity of each good produced and the price at which it is sold.
b.
the quantity of each good produced but not the price at which it is sold.
c.
the price at which each good is sold but not the quantity of each good produced.
d.
neither the quantity of each good produced nor the price at which it is sold.
5. In a market economy, supply and demand are important because they
a.
play a critical role in the allocation of the economy’s scarce resources.
b.
determine how much of each good gets produced.
c.
can be used to predict the impact on the economy of various events and policies.
d.
All of the above are correct.
6. In a market economy, supply and demand are important because they
a.
are direct policy tools used by government agencies to regulate the economy.
b.
illustrate when an market is in equilibrium, but they are not helpful when a market is out of equilibrium.
c.
can be used to predict the impact on the economy of various events and policies.
d.
All of the above are correct.
7. In a market economy,
a.
supply determines demand and demand, in turn, determines prices.
b.
demand determines supply and supply, in turn, determines prices.
c.
the allocation of scarce resources determines prices and prices, in turn, determine supply and demand.
d.
supply and demand determine prices and prices, in turn, allocate the economy’s scarce resources.