17. Which of the following is a determinant of supply?
A. Tastes and preferences
B. Price of a complementary good
C. Consumer income
D. Technology
18. A market is in equilibrium:
A. provided there is no surplus of the product
B. at all prices above that shown by the intersection of the supply and demand curves
C. if the amount producers want to sell is equal to the amount consumers want to buy
D. whenever the demand curve is downsloping and the supply curve is upsloping.
19. If the market price is above the equilibrium price:
A. A shortage will occur and producers will produce more and lower prices
B. A surplus will occur and producers will produce less and lower prices
C. A surplus will result and consumers will bid prices up
D. Producers will make extremely high profits
20. The market system automatically corrects a surplus condition in a competitive market by:
A. Raising the price of the commodity in question while increasing the quantity demanded
B. Raising the price of the commodity in question while decreasing the quantity demanded
C. Reducing the price of the commodity in question while increasing the quantity demanded
D. Reducing the price of the commodity in question while decreasing the quantity demanded
21. The price elasticity of demand measures:
A. buyer responsiveness to price changes.
B. the extent to which demand curve shifts as incomes change.
C. the slope of the demand curve.
D. how far business executives can stretch their fixed costs
22. The elasticity of demand for a product is likely to be greater:
A. if the product is a necessity, rather than a luxury good.
B. the greater the amount of time over which buyers adjust to a price change
C. the smaller the proportion of one's income spent on the product.
D. the smaller the number of substitute products available.
23. Market failure is said to occur whenever:
A. private markets do not allocate resources in the most economically desirable way
B. prices rise
C. some consumers who want a good do not obtain it because the price is higher than they are willing to pay
D. government intervenes in the functioning of private markets.
24. A negative externality or spillover cost occurs when:
A. firms fail to achieve allocative efficiency.
B. firms fail to achieve productive efficiency.
C. the price of the good exceeds the marginal cost of producing it.
D. the total cost of producing a good exceeds the costs borne by the producer
