6. Which of the following is NOT absolutely essential for a market to exist? a)

ID: 1184426 • Letter: 6

Question

6. Which of the following is NOT absolutely essential for a market to exist?

a)buyers willing and able to buy

b)sellers willing and able to sell

c)some means to cummunicate

d)price

e)money

7.What is the key difference between the term "demand" and "quantity demanded"?

a)"demand' is a function of price, while the "quantity demanded" is a function of the determinants of demand.

b)"quantity demanded" is a function of the price, while "demand" is a function of the determinants of demand.

c)The two terms are used interchangeably and mean the same thing.

d)changes is "quantity demanded" involve shifts in the demand curve while changes in "demand" is simply movement along a fixed demand curve.

e)none of the above describes a key difference between the terms "demand" and "quantity demanded".

8. If there is no outside interference in a competitive market, _____________________.

a)that market will tend to be chaotic and unstable.

b)that market will tend to produce inefficiency and waste

c)that market will tend to seek and equilibrium price where the quantity demanded just equals the quantity supplied

d)that market will tend to seek and equilibrium price where demand equals supply

e)none of the above describes how a market will behave without outside interference.

9. black markets emerge during times when government sets ________________.

a)price floors

b)price ceilings

c)both price floors and price ceilings

d)neither price floors nor price ceilings

10. When a price floor is set above the market equilibrium price, the quantity

a)demanded will decrease and quantity supplied will increase creating a surplus

b)supplied will increase and the quantity demanded will increase creating a shortage

c)demanded will decrease and the quantity supplied will not change

d)supplied will decrease and quantity demanded will not change

e)any of the above may happen under the right circumstances.

6.e 7.b 8.c 9.b 10.a

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