MCQs of Economics – Market

A perfectly competitive market has:

If an increase in the price of blue jeans leads to an increase in the demand for tennis shoes, then blue jeans and tennis shoes are

The law of demand states that an increases in the price of a good

The law of supply states that an increase in the price of a good

If an increase in consumer incomes leads to a decrease in the demand for camping equipment, then camping equipment is

A monopolistic market has

Which of the following shifts the demand for watches to the right?

All of the following shift the supply of watches to the right except

If the price of a good is above the equilibrium price

If the price of good is below the equilibrium price,

If the price of good is equal to the equilibrium price,

An increase (rightward shift) in the demand for a good will tend to cause

A decrease (leftward shift) in the supply for a good will tend to cause

Suppose there is an increase in both the supply and demand for personal computers. In the market for personal computers, we would expect

Suppose there is an increase in the both the supply and demand for personal computers Further, suppose the supply of personal computer increase more than demand for personal computers In the market for personal computers i the market for personal computers, we would expect

Which of the following statements is true about the impact of an increase in the price of lettuce?

Suppose a frost destroys much of the Florida orange crop. At the same time, suppose consumer tastes shift toward orange juice, What would we expect to happen to the equilibrium price and quantity in the market for orange juice?

Suppose consumer tastes shift toward the consumption of apples Which of the following statements is an accurate description of the impact of this event on the market for apples?

Suppose both buyers and sellers of wheat expect the price of wheat to rise in the near future. What would we expect to happen to the equilibrium price and quantity in the market for wheat today?

An inferior good is one for which an increase in income causes a(n)

If demand increase in a market this will usually lead to:

An increase in income will

A reduction in the costs of production will:

A shift in supply will have a bigger effect on price than output if demand is:

Assuming a downward sloping demand curve and upward sloping supply curve a higher equilibrium price may be caused by:

If the price was fixed below the equilibrium price there would be:

A movement along the demand curve may be caused by:

A subsidy paid to producers:

A movement along the supply curve may be caused by:

The price mechanism cannot:

Which best describes consumer surplus?

The price mechanism does not act as a:

A shift is demand will have more effect on price than quantity if:

A shift in demand will have more effect on price than quantity if:

A shift in supply will have more effect on price than quantity if:

A decrease in demand for a products should:

An increase in demand for a product should:

Income inequality can be high in the free market and should be reduced This is an example of What?

A public good will

A positive externality occurs when:

If the price in a market is fixed by the government below equilibrium:

If the price in a market is fixed by the government above equilibrium

Merit goods are:

Agricultural prices tend to be unstable because:

When supply increase in an agricultural market farmer’s earning might fall because:

Which of the following is the government most likely to subsidies?

With a positive externality:

A public good:

Nationalisation occurs when:

If a maximum price is set below equilibrium there will be

A price ceiling is:

Economics say that there has to be some from of rationing whenever:

It is necessary to ration a good whenever:

In a free market system rationing occurs when there are increases in:

If the market price is below the equilibrium price:

If a government were to fix a minimum wage for adult workers, economists would predict:

Economists use the term Black Markets for situations where:

An example of an indirect tax is:

VAT is a good example of which kind of tax?

The government is considering placing a tax on cigarettes to raise revenue to finance health-care benefits. The demand for cigarettes is price inelastic Which of the following statements is True?

Tax incidence is the:

Tax shifting:

Where a tax can be shifted, the incidence depends on:

The supply rule of the profit maximising monopolist is different from that of a competitive firm:

Comparing a monopoly and competitive firm, the monopolist will:

A discriminating monopolist will charge a higher price to groups with elastic demand

A monopoly may be self-perpetuating because profits may be used for

All of the following are types of imperfect competition except

A natural monopoly has a declining _____ over a large range of output

When a market is contestable, incumbent firms must ______ to avoid the entry of new competitors

The long run equilibrium in monopolistic competition involves competitors making excess profits

The reason for the kinked demand curve is that

Game theory studies interdependent decision making

The prisoners Dilemma Game demonstrates that

In Nash equilibrium each player chooses the best strategy:

A dominant strategy is:

Strategic entry barriers are made by nature

In the insurance industry, high-risk customers are more likely to take out insurance. This is an example of

Moral hazard means that the act of insuring ____ that the desired outcome will occur

An allocation is Pareto-efficient if no reallocation of resources would make some people ____ without making others ____

A competitive equilibrium is pareto-efficient

We cannot say whether one allocation of resources is better than another allocation because

A competitive equilibrium is Pareto-efficient because:

The allocation of resources is not efficient if:

If my neighbour burns garden waste causing my house to fill with smoke this is an example of:

Externalities arise because there is a divergence between ____ and _____

Market failure may arise because of:

Markets sometimes fail to exist because of

A good example of a public good is:

If the consumption of good by one person does not reduce the quantity available by others and nobody can be easily excluded from consumption, we are referring to a

Satellite television subscription and television detection devices are ways in which broadcasting companies address the _____ problem

Taxes to offset externalities ar distortionary

Except for taxes to offset ____ taxes are ____

Taxes creates a wedge between the sales price and purchase price that prevents the price system equating ____ and ______

The effect of a tax to offset a negative externality will be to ____ price and ______ quantity

The social costs of monopoly power arises because:

If two firms doing the same thing in the same industry join together, this is known as a:

The problem posed by a natural monopoly is that it faces a _____ This means that _______