Economics Principles & Practices

Chapter 6: Prices and Decision Making

Self-Check Quizzes

1
High prices are signals for producers to produce __________and for buyers to buy __________.
A)more; the same amount
B)the same amount; less
C)less; more
D)more; less
2
Problems regarding fairness, high administrative costs, and diminished incentives to work and produce can be the result of __________.
A)nonprice allocation systems
B)price allocation systems
C)supply
D)demand
3
Advantages of using __________to allocate goods and services include freedom of choice, no administrative costs, neutrality, flexibility, and efficiency.
A)tariffs
B)prices
C)rationing
D)marginal product
4
Economist often use a(n) __________, a set of assumptions and/or relationships that can be listed in a table, illustrated with a graph, or even stated algebraically, to help analyze behavior and predict outcomes.
A)cost-benefit analysis
B)economic model
C)decision making grid
D)variable proportion model
5
In a competitive market, if the price is too high, a temporary __________appears until the price goes down.
A)shortage
B)price ceiling
C)surplus
D)price floor
6
The actual price changes in any given market are likely to be greater if both supply and demand are __________.
A)cross elastic
B)unit elastic
C)elastic
D)inelastic
7
A __________ is a check sent to producers that makes up the difference between the actual market price and the target price.
A)ration coupon
B)deficiency payment
C)target payment
D)market coupon
8
If the fixed price is a __________, as in the case of rent controls, a shortage usually appears for as long as the price remains fixed below the equilibrium.
A)price ceiling
B)price floor
C)price surplus
D)fixed shortage
9
When economists say "markets talk," they mean _____________.
A)deficiency payments are needed
B)prices are too low
C)prices in markets move up or down significantly
D)price floors prevent markets from reaching equilibrium
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