Question 1

If the government places a binding or effective price ceiling on cancer-treating drugs,then

Accepted Answer

Placing a price ceiling on cancer-treating drugs would likely lead to a decrease in the supply of these drugs because pharmaceutical companies would have less incentive to invest in research and development. This could result in a shortage of drugs, leading to more people dying from cancer.

Question 2

Table 3.1 Individual Demand and Supply Schedules
Complete Table 3.1.Then answer the indicated question.  
-In Table 3.1,if the price is $4,the market will

Accepted Answer

The answer of Table 3.1 Individual Demand and Supply Schedules
Complete...

Question 3

Complete Table 3.1.Then answer the indicated question.   Table 3.1 Individual Demand and Supply Schedules
-In Table 3.1,if government held the price at $3,

Accepted Answer

At a price of $3, the quantity demanded is 450 and the quantity supplied is only 350, resulting in a shortage of 100 units. Therefore, there would be a shortage.

Question 4

An increase in the equilibrium price of electricity can be caused by

Accepted Answer

An increase in the equilibrium price of electricity can be caused by an increase in the demand for electricity. When demand for electricity increases, and supply remains constant, the equilibrium price will increase to balance out the market. An increase in supply (choice A) would result in a decrease in price rather than an increase. A decrease in demand (choice C) would also result in a decrease in price. An increase in quantity demanded (choice D) can lead to an increase in price only if accompanied by a decrease in supply.

Question 5

When economists talk about "optimal outcomes" in the marketplace,they mean that

Accepted Answer

"Optimal outcomes" in the marketplace refer to the best possible allocation of resources given the constraint of scarce resources and income limitations. It does not necessarily mean that all consumer desires are satisfied or that everyone who wants a good or service can have it, but rather that the market is likely to allocate resources in the most efficient way possible.

Question 6

If a price ceiling is to be binding or effective,it should be set

Accepted Answer

If the price ceiling is set below the equilibrium price, it means the price is artificially low and below what suppliers are willing to offer at that quantity. As a result, consumers will demand more at the lower price, causing a shortage in the market. Thus, a price ceiling set below the equilibrium price will be binding and effective.

Question 7

The price ceiling that the federal government placed on human organs caused

Accepted Answer

A price ceiling is a maximum price that can be charged for a product or service. Placing a price ceiling on human organs would make it illegal for sellers to charge more than the specified price. This would likely result in a shortage because the quantity demanded at the lower price would exceed the quantity supplied, leading to a mismatch between buyers and sellers. Therefore, the correct answer is C.

Question 8

Suppose a hurricane hits Florida,causing widespread damage to houses and businesses.The governor of Florida places price ceilings on all building materials to keep the prices reasonable.Which of the following is the most likely result?

Accepted Answer

Price ceilings create a situation where demand exceeds supply, leading to shortages. In this scenario, placing price ceilings on building materials would cause shortages and slow down the recovery from the storm.

Question 9

When the market mechanism is allowed to operate freely,prices will determine

Accepted Answer

When the market mechanism operates freely, prices help to determine the allocation of resources and the mix of output to be produced. In addition, prices also determine for whom the output is produced. Therefore, all three factors - mix of output, resources used, and distribution of output - are determined by prices under a free market mechanism.

Question 10

In a market economy,which of the following determines the answer to the WHAT to produce question?

Accepted Answer

In a market economy, prices are determined by supply and demand, and businesses aim to produce goods and services that will generate the most profit. Therefore, "Prices and profit" determine the answer to the "What to produce" question.

Question 11

Complete Table 3.1.Then answer the indicated question.   Table 3.1 Individual Demand and Supply Schedules
-In Table 3.1,if the price is $2,the market will

Accepted Answer

At a price of $2, the quantity demanded is 28 units and the quantity supplied is only 6 units, resulting in a shortage of 22 units.

Question 12

Which of the following is most likely to occur because of an increase in the price of electricity in California?

Accepted Answer

An increase in the price of electricity in California would likely lead to an increase in electricity imported into the state as suppliers from other regions seek to take advantage of higher prices.

Question 13

Complete Table 3.1.Then answer the indicated question.   Table 3.1 Individual Demand and Supply Schedules
-In Table 3.1,the equilibrium market price is

Accepted Answer

The answer of Complete Table 3.1.Then answer the indicated question....

Question 14

Price ceilings are intended to address the problem of

Accepted Answer

The answer of Price ceilings are intended to address the...

Question 15

In a market economy,which of the following is an incentive for producers to produce efficiently?

Accepted Answer

In a market economy, profits are the main incentive for producers to produce efficiently. Producers are motivated to minimize costs and maximize revenue in order to generate profits. This drives them to improve efficiency, reduce waste, and innovate in order to produce better goods at lower costs, which benefits both themselves and their customers. Government laws and regulations, the production possibilities curve, and the public's welfare may also influence producers' behavior, but they are not the primary incentive for efficiency in a market economy.

Question 16

A decrease in the price of electricity can best be explained by

Accepted Answer

A decrease in population can lead to a lower demand for electricity, which can result in a decrease in its price.

Question 17

The federal government placed an upper limit on human organ prices,which is called a

Accepted Answer

The federal government placing an upper limit on human organ prices is an example of a price ceiling, which is a government-imposed limit on how high a price can be charged for a good or service.

Question 18

Suppose both the demand for and supply of salsa increase (although not necessarily by the same amount).What can we conclude about changes in the price and quantity of salsa?

Accepted Answer

When both demand and supply increase, the quantity will definitely increase. However, the change in price depends on the relative magnitudes of the shifts in demand and supply, so it cannot be determined.

Question 19

In a market economy,the people who receive the goods and services produced are those who

Accepted Answer

In a market economy, goods and services are distributed based on the willingness and ability of individuals to pay the market price. This means that those who have the resources to pay for the goods and services are the ones who receive them. Need or want alone do not determine the distribution of goods and services in a market economy. Political power may influence the economic decisions, but it does not determine who receives the goods and services produced.

Question 20

Use the following figure to answer the question: Figure 3.2 Supply and Demand
 
-The equilibrium price and quantity in Figure 3.2 are,respectively :

Accepted Answer

The equilibrium price is the price at which the quantity supplied equals the quantity demanded. In Figure 3.2, this occurs at a price of $9 and a quantity of 30 units.

Quiz 3: Supply and Demand