Principles of Economics An Asian Edition 1st Edition by N. Gregory Mankiw – Test bank

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Principles of Economics An Asian Edition 1st Edition by N. Gregory Mankiw – Test bank

Chapter 4: MC1-The Market Forces of Supply and Demand

MULTIPLE CHOICE

1. The forces that make market economies work are

a.	work and leisure.
b.	demand and supply.
c.	regulation and restraint.
d.	taxes and government spending.

ANS: B

PTS: 1 DIF: 1 REF: 4-0 TOP: Market economy

MSC: Interpretive

2. Which of the following are the words most commonly used by economists?

a.	surplus and shortage
b.	resources and allocation
c.	supply and demand
d.	theory and practice

ANS: C

PTS: 1 DIF: 1 REF: 4-0 TOP: Economists

MSC: Interpretive

3. In a market economy,

a.	supply determines demand and in turn, demand determines prices.
b.	demand determines supply and in turn, supply determines prices.
c.	the allocation of scarce resources determines prices and in turn, prices determine supply and demand.
d.	supply and demand determine prices and in turn, prices allocate scarce resources.

ANS: D

PTS: 1 DIF: 2 REF: 4-0 TOP: Market economy

MSC: Interpretive

4. In a market economy, supply and demand are important because they

a.	play a critical role in the allocation of the economy’s scarce resources.
b.	determine how much of each good gets produced.
c.	can be used to predict the impact on the economy of various events and policies.
d.	All the above are correct.

ANS: D

PTS: 1 DIF: 1 REF: 4-0 TOP: Market economy

MSC: Interpretive

5. A wet monsoon hitting Malaysia raises the prices of vegetables in supermarkets throughout the country as well as in Singapore. This is caused due to

a.	demand and supply
b.	work and leisure
c.	surplus and shortage
d.	taxes and government spending

ANS: A

PTS: 1 DIF: 1 REF: 4-0 TOP: Market economy

MSC: Interpretive

6. A market is a

a.	group of buyers and sellers of a particular good or service.
b.	group of people with common economic characteristics.
c.	place where buyers and sellers come together to engage in trade.
d.	place where an auctioneer helps set prices and arrange sales.

ANS: A

PTS: 1 DIF: 1 REF: 4-1 TOP: Markets

MSC: Definitional

7.For a market for a good or service to exist,

a.	there must be a group of buyers and sellers.
b.	there must be a specific time and place at which the good or service is traded.
c.	the price of the good must be determined by the sellers.
d.	All the above are correct.

ANS: A

PTS: 1 DIF: 1 REF: 4-1 TOP: Markets

MSC: Definitional

8.The term market always refers to

a.	an arrangement in which buyers and sellers meet at a specific time and place.
b.	an arrangement in which an auctioneer plays at least a limited role in setting prices.
c.	a group of buyers and sellers of a particular good or service.
d.	All the above are correct.

ANS: C

PTS: 1 DIF: 1 REF: 4-1 TOP: Markets

MSC: Definitional

MAECENAS IACULIS

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ADIPISCING CONVALLIS BULUM

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