What results when the government fixes a market price below the equilibrium level?
Correct answer A. There is excess demand
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Market MCQs
Page 2 of Market multiple-choice questions with answers. Tap an option to check yourself.
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How are merit goods supplied in a free market economy?
Correct answer A. Under provided in the free market economy
Why might farmers’ total earnings fall when supply in an agricultural market increases?
Correct answer C. Demand is price inelastic
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What tends to happen in a free market when a good creates a positive externality?
Correct answer B. There is under-consumption in the free market
When does nationalisation take place?
Correct answer A. The government takes control of an industry
What is meant by a price ceiling?
Correct answer C. A maximum price usually set by government that sellers may charge for a good
In which situation does a good need to be rationed?
Correct answer C. Demand exceeds supply
What happens when the market price is set below the equilibrium price?
Correct answer D. Quantity demanded will be greater than quantity supplied
In economics, what situation does the term black market describe?
Correct answer A. Goods are sold at prices above legal or official price
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Which uses of monopoly profit can help a monopoly keep its dominant position over time?
Correct answer D. All of the above
Why does an oligopolist face a kinked demand curve?
Correct answer A. The oligopolist believes that competitors will match price cuts but not price rises
What does the Prisoners’ Dilemma game demonstrate?
Correct answer A. Players are better off if they co-operate
What is a dominant strategy in game theory?
Correct answer B. A player's best strategy whatever the strategies adopted by rivals
Moral hazard means that being insured ____ that the insured-against outcome will occur. Which phrase completes the sentence?
Correct answer B. Increases the likelihood
An allocation is Pareto-efficient if no reallocation of resources can make some people ____ without making others ____. Which pair completes the sentence?
Correct answer C. Better off; worse off
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Why can we not simply say that one allocation of resources is better than another?
Correct answer D. We cannot make value judgements to compare different people's welfare
In which case is the allocation of resources inefficient?
Correct answer D. The marginal cost of production does not equal society's marginal benefit
Externalities arise because of a gap between which two things?
Correct answer D. Private costs, social costs or benefits
Why do some markets fail to exist at all?
Correct answer C. A and B
What do we call a good where one person’s consumption does not reduce the amount available to others and no one can easily be excluded from using it?
Correct answer A. Public good