Understanding Market Interactions and Structures

Which of the following best defines a household in economic terms?

• A group of people living together who share income and expenses

• A business that produces goods and services

• A government agency that regulates markets

• A financial institution that lends money

What is the law of demand?

• As the price of a good increases, the quantity demanded increases

• As the price of a good increases, the quantity demanded decreases

• As the price of a good decreases, the quantity supplied decreases

• As the price of a good decreases, the quantity demanded decreases

Which of the following is NOT one of the four types of market structures in the U.S. economy?

• Monopoly

• Oligopoly

• Perfect competition

• Socialism

What do businesses provide to households in the circular flow model?

• Goods and services

• Taxes

• Regulations

• Wages only

Which term describes the amount of a good or service that producers are willing and able to sell at a given price?

• Demand

• Supply

• Price ceiling

• Equilibrium

Which market structure is characterized by a single seller?

• Monopoly

• Oligopoly

• Monopolistic competition

• Perfect competition

In the circular flow model, what do households provide to businesses?

• Resources (land, labor, capital, entrepreneurship)

• Finished goods

• Government regulations

• Taxes

What happens to the quantity supplied of a product if its price increases, according to the law of supply?

• It decreases

• It stays the same

• It increases

• It becomes zero

Which of the following is a characteristic of perfect competition?

• Many buyers and sellers

• One seller controls the market

• Products are highly differentiated

• High barriers to entry

Which of the following best describes the flow of money in the circular flow model?

• From households to businesses in exchange for goods and services

• From businesses to government as taxes

• From government to households as subsidies

• From banks to businesses as loans