Economics Principles and Practices © 2012 Georgia

Chapter 6: Prices and Decision Making

Self-Check Quizzes

1
Which of the following statements is true?
A)Prices require a large bureaucratic system.
B)Prices cannot adjust to unexpected shocks, such as hurricanes.
C)Prices are complicated and difficult to understand.
D)Prices favor neither the consumer nor the producer.
2
The price system can absorb shocks such as war and natural disasters because the system is ________.
A)neutral
B)rigid
C)flexible
D)cheap to administer
3
Competitive markets establish prices by ______.
A)hiring bureaucrats to determine prices
B)forming committees to set price goals
C)passing laws to mandate prices
D)letting prices adjust themselves
4
All of the following are problems with rationing EXCEPT
A)perceived unfairness.
B)high administrative cost.
C)even distribution.
D)diminishing incentives.
5
If bad weather destroyed most of a country's crops, the price of food would _______.
A)increase because of a change in demand
B)decrease because of a change in supply
C)increase because of a change in supply
D)decrease because of a change in demand
6
Prices in any given market are likely to vary most dramatically when ______.
A)both supply and demand are elastic
B)supply is elastic and demand is inelastic
C)supply is inelastic and demand is elastic
D)both supply and demand are inelastic
7
The market equilibrium price is derived by _______.
A)applying the Law of Supply
B)applying the Law of Demand
C)predicting the actions of buyers and sellers
D)using trial and error
8
Among the following broad economic and social goals, the least compatible with a market economy is _______.
A)freedom
B)efficiency
C)equity
D)growth
9
The result of price ceilings on apartment rental costs is often ______.
A)fewer homeless people
B)more luxury apartments
C)a shortage of apartments
D)fewer able and willing renters
10
The federal government has tried to stabilize farm prices by ______.
A)setting price floors for certain crops
B)buying and storing surplus crops
C)paying farmers the difference between market prices and target prices
D)using all of the methods above
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