QUESTION 1 Which of the following is the most accurate definition of a market? O

Question

QUESTION 1 Which of the following is the most accurate definition of a market? O A. The market is a fictitious entity that does not exist in the real world O B. A market exists if there are only sellers who want to sell their products ° C. A market exists if there are only buyers who want to purchase a product. O D. A market is the arrangement, not necessarily a physical place, through which potential buyers and sellers come together to exchange goods and services O E. A market is a physical place where buyers and sellers have to be present for the market to work QUESTION 2 On Graph B, the equilibrium price and quantity are O A. $12 and 550 units B $14 and 1,070 units O C $14 and 550 units O D $12 and 630 units O E $5 and 350 units Click Save and Submit to sqve and submii, Click Save all Ansigers to save all ansuers Save A

Explanation / Answer

(Question 1) Option (D)

A market is a physical or non-physical place where buyers and sellers exchange goods or services at a common price.

(Question 2) Option (A)

Equilibrium is at the intersection of demand and supply curves, where Price = $12 and quantity = 550

(Question 3) Option (B)

At price = $14, quantity demanded = 350 and quantity supplied = 630. Since sellers can sell only the quantity demanded by buyers, market quantity is 350.

(Question 4) Option (E)

At price = $5, quantity demanded = 1,070 and quantity supplied = 220. Since buyers can buy only the quantity sold by sellers, market quantity is 220.

(Question 5) Option (C)

Surplus exists when market price > equilibrium price.

(Question 6) Option (A)

Shortage exists when market price < equilibrium price.

(Question 7) Option (C)

Higher income increases demand.

(Question 8) Option (B)

An effective price ceiling is set below equilibrium price.

(Question 9) Option (D)

Decrease in demand shifts demand curve left, decreasing both price and quantity.

(Question 10) Option (D)

At price = $5, quantity demanded = 1,070 and quantity supplied = 220

Shortage = 1,070 - 220 = 850

(Question 11) Option (A)

At price = $14, quantity demanded = 350 and quantity supplied = 630

Surplus = 630 - 350 = 280

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