Question 1

What incentives are created under a first come, first served allocation mechanism?

To acquire purchasing ability (to obtain income and wealth)
To be first
To produce the most
Fairness
Equality for all

Question 2

The market system may not be efficient because people want more of the product. In this situation, the market

is unable to measure the cost of cigarettes.
is not able to account for all costs and benefits.
accounts for all costs and benefits except in the case of fast food.
cannot account for the cost of Styrofoam cups.
is always able to account for all costs and benefits.

Question 3

The development of a low-cost synthetic fuel is expected to affect the market for crude oil in which of the following ways?

Decrease the price of oil
Decrease the quantity demanded and quantity supplied of oil
All of these
Decrease the demand for oil
Decrease the equilibrium quantity of oil

Question 4

A market

makes possible the exchange of goods and services between buyers and sellers.
refers only to a formally organized place where a well-defined commodity is always traded.
refers only to a specialized place or service where goods and services are exchanged.
refers only to a localized place or service that facilitates the exchange of goods and services.
refers to both large and small places where poorly defined commodities are traded.

Question 5

Ryan is on a limited budget. He constantly takes money from the office coffee jar to pay for his meals. Ryan is utilizing a free market as it is intended to be used.

True
False

Question 6

Disequilibrium does not exist when

there is a surplus.
quantity demanded and quantity supplied are equal.
there is a shortage.
the existing price is below the equilibrium price.
the existing price is above the equilibrium price.

Question 7

If both supply and demand for a good increase, which of the following will definitely happen?

Price will decrease.
Price will increase.
Quantity will decrease.
Price will remain the same.
Quantity will increase.

Question 8

A market is in equilibrium when
equilibrium price equals equilibrium quantity.
the government imposes price controls.
the demand and supply curves intersect.
the price is low.
the price is high.

Question 9

Assume that the supply curve of sirloin steak is upward sloping. If the price increases from $5.25 to $8.60 per pound,

the demand for sirloin steak will decrease.
the supply of sirloin steak will rise.
a greater quantity of sirloin steak will be supplied.
the supply of sirloin steak will decrease.
a smaller quantity of sirloin steak will be supplied.

Question 10

Assume an increase in the profitability of firms in a product market. Over time, we can expect
firms to leave this market.
the equilibrium price of the product to fall.
the demand for resources to increase.
market supply to decrease.
the equilibrium price of the product to rise.