market MCQs – Page 4

Practise focused market questions with marked answers for exam preparation and subject revision.

market Mcqs

61. If the market price is below the equilibrium price ?
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A. quantity demanded will be greater than quantity supplied

B. quantity demanded will equal quantity supplied .

C. quantity demanded will be less than quantity supplied

D. demand will be less than supply.

62. Taxes creates a wedge between the sales price and purchase price that prevents the price system equating ____ and ______?
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A. demand, supply

B. marginal cost, average cost

C. marginal cost, marginal revenue

D. marginal costs, marginal benefits

63. A monopolistic market has ?
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A. firms that are price takers

B. many buyers and sellers

C. only one seller

D. none of these answers

64. If an increase in consumer incomes leads to a decrease in the demand for camping equipment, then camping equipment is ?
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A. an inferior good

B. a substitute good

C. a normal good

D. none of these answers

65. If my neighbour burns garden waste causing my house to fill with smoke this is an example of ?
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A. a production externality

B. a consumption externality

C. transaction costs

D. a second-best solution

66. A public good ?
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A. Gas external costs

B. Is free

C. Has the properties of being non-excludable and non-diminishable

D. Is provided by the government

67. The prisoners Dilemma Game demonstrates that ?
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A. monopoly is better than competition

B. people will always cheat

C. players are better off if they co-operate

D. players are better of to act independently

68. If two firms doing the same thing in the same industry join together, this is known as a ?
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A. vertical merger

B. horizontal merger

C. hostile takeover

D. conglomerate merger

69. If an increase in the price of blue jeans leads to an increase in the demand for tennis shoes, then blue jeans and tennis shoes are ?
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A. Complements

B. normal goods

C. none of these answers

D. inferior goods

E. Substitutes

70. If the price in a market is fixed by the government below equilibrium ?
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A. There is excess supply

B. There is excess demand

C. There is equilibrium

D. There is excess equilibrium

71. In Nash equilibrium each player chooses the best strategy ?
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A. that is a credible threat

B. Assuming other players move first

C. dominated by the other players

D. given the strategies of other players

72. An increase (rightward shift) in the demand for a good will tend to cause ?
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A. an increase in the equilibrium price and quantity

B. a decrease in the equilibrium quantity.

C. an increase in the equilibrium price and a decrease in the equilibrium quantity

D. a decrease in the equilibrium price and quantity.

E. none of these answers

73. In a free market system rationing occurs when there are increases in ?
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A. quantity

B. supply

C. price

D. demand

74. A shift in supply will have more effect on price than quantity if ?
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A. The price elasticity of supply is 3

B. The price elasticity of supply is infinity

C. The price elasticity of supply is 0.2

D. The price elasticity of supply is 2

75. When supply increase in an agricultural market farmers earning might fall because ?
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A. Supply is price elastic

B. Demand is price inelastic

C. All output must be sold at a maximum price

D. The government buys up all the excess production

76. The social costs of monopoly power arises because ?
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A. price is less than marginal cost

B. marginal cost is set equal to marginal revenue

C. marginal consumer benefit is less than marginal revenue

D. there is too little output at too high a cost

77. If a government were to fix a minimum wage for adult workers, economists would predict ?
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A. fewer young workers would be employed

B. the costs and prices of firms employing cheap labour would increase

C. there would be more unemployment

D. wages in general would fall as employers tried to hold down costs

78. All of the following shift the supply of watches to the right except ?
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A. an advance in the technology used to manufacture watches

B. a decrease in the wage of workers employed to manufacture watches

C. All of these answers cause an increase in the supply of watches

D. an increase in the price of watches

79. Moral hazard means that the act of insuring ____ that the desired outcome will occur?
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A. none of the above

B. increases the likelihood

C. reduces the likelihood

D. guarantees

80. An example of an indirect tax is ?
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A. income tax

B. inheritance tax

C. VAT

D. a tax on profits

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