How would you paraphrase the definition of equilibrium price?
Equilibrium price occurs when supply and demand quantities meet.
Equilibrium price occurs when price and demand are consistent.
Equilibrium price is established when buyers' and sellers' price and quantity are the same.
Equilibrium price is established when buyers' and sellers' demand and production are the same.


Question 2.2.
What effect do price ceilings and price floors have on the mark
Price ceilings cause an increase in demand and a decrease in quantity supplied, which result in market shortages.
Price floors cause an increase in demand and a decrease in quantity supplied, which result in market surpluses.
Price ceilings cause an increase in demand and a decrease in quantity supplied, which result in market surpluses.
Price floors cause an increase in demand and a decrease in quantity supplied, which result in market shortages.


Question 3.3.
Which of the following statements best describes microeconomics versus macroecono
Macroeconomics is to details as microeconomics is to the total.
Microeconomics is to inflation as macroeconomics is to product prices.
Macroeconomics is to the big picture as microeconomics is to details.
Macroeconomics is to the pieces as microeconomics is to the puzzle.
Question 4.4.
Which of the following expressions captures the meaning of opportunity cost?

A penny saved is a penny earned.
A fool and his money are soon parted.
A stitch in time saves nine.
There's no such thing as a free lunch.


Question 5.5.
Which countries would you predict have the highest and lowest opportunity cost associated with a strong military?
Highest-Mexico; Lowest-North Korea
Highest-North Korea; Lowest-Mexico
Countries with large armies will have the greatest opportunity cost
Countries with the small armies will have the greatest opportunity cost


Question 6.6.
Bill has plenty of money to buy a new car, although he is reluctant to do so because he also wants to pay cash for his vacation this year. What element of a market economy prevents Bill from buying a new car in this scenario?
Equilibrium price
Ceteris paribus
Initial demand
Demand, because he is not also willing to purchase the car

Question 7.7.
If an economic system allows consumers to set the prices for goods, what economic phenomenon is at work?

&#-96; Price fixing

Supply/demand
A shift in the production-possibilities curve
The invisible hand

Question 8.8.
If someone told you that a demand curve is good, long-term evidence of the consumers' buying activity, would you agree or disagree?
I would agree because of the correlation between demand and buying activity.
I would agree; consumers tend to buy according to their demand for extended periods of time.
I would disagree; the demand curve reflects only a willingness to buy only as long as the determinants of demand remain unchanged.
I would disagree because there is no correlation between demand and buying activity.


Question 9.9.
What fundamental difference can you identify between the philosophies of Adam Smith and Karl Marx?
Marx believed the market would best answer the what, how and for whom questions; Smith believed in a central planning system to answer these questions.
Smith believed the market would best answer the what, how and for whom questions; Marx believed in a central planning system to answer these questions.
Marx believed the consumer should set prices; Smith did not.
Smith believed the government should control the factors of production; Marx did not.


Question 10.10.
If everyone were able to produce all the goods and services they wanted or needed with unlimited resources, what impact would such a phenomenon have on economics?
There would be no product markets
There would be no money system
There would be more factors of production
There would be more goods and services