Unit 2 Econ and Personal Finance Quiz

What does the law of demand state?

• As the price increases, demand increases.

• As the price decreases, demand remains unchanged.

• As the price increases, demand decreases.

• As the price decreases, supply increases.

Which of the following is a determinant of supply?

• Consumer preferences

• Number of sellers in the market

• Income of buyers

• Price of related goods

In a perfectly competitive market, how many firms have control over the market price?

• One

• A few

• None

• All of them

What is a characteristic of a monopolistic market?

• Many sellers and many buyers

• One seller and many buyers

• Many sellers and one buyer

• Perfect information

What happens to the equilibrium price when there is an increase in demand, assuming supply remains constant?

• It decreases

• It increases

• It remains unchanged

• It first increases, then decreases

Which market structure is characterized by a few large producers, differentiated products, and significant barriers to entry?

• Perfect competition

• Monopoly

• Oligopoly

• Monopolistic competition

What is the primary goal of a firm in a perfectly competitive market?

• To differentiate their product

• To maximize profits

• To increase market share

• To form cartels

In the context of supply and demand, what does the term "market equilibrium" refer to?

• The point where the supply curve intersects the demand curve

• The maximum price consumers are willing to pay

• The minimum price suppliers are willing to accept

• The point where the government sets the price

What effect does a government-imposed price ceiling below the equilibrium price have on the market?

• It increases supply

• It decreases demand

• It creates a surplus

• It creates a shortage

Which of the following is an example of a barrier to entry in an oligopolistic market?

• High consumer demand

• Low startup costs

• Patents and licenses

• Perfect information