ECON 202S Chapter 2 Test Bank

2. Markets, viewed from the perspective of the supply and demand model: A. assume many buyers and many sellers of a standardized product. B. assume market power so that buyers and sellers bargain with one another. C. do not exist in the real-world economy. D. are approximated by markets in which a single seller determines price.

A. assume many buyers and many sellers of a standardized product.

1. Which of the following is a distinguishing feature of a command system? A. private ownership of all capital. B. central planning. C. heavy reliance on markets. D. wide-spread dispersion of economic power.

B. central planning

6. Economists use the term "demand" to refer to: A. a particular price-quantity combination on a stable demand curve. B. the total amount spent on a particular commodity over a fixed time period. C. an upsloping line on a graph that relates consumer purchases and product price. D. a schedule of various combinations of market prices and amounts demanded.

D. a schedule of various combinations of market prices and amounts demanded.

1. A market: A. reflects upsloping demand and downsloping supply curves. B. entails the exchange of goods, but not services. C. is an institution that brings together buyers and sellers. D. always requires face-to-face contact between buyer and seller.

C. is an institution that brings together buyers and sellers.

2. Which of the following is a distinguishing feature of laissez-faire capitalism? A. public ownership of all capital. B. central planning. C. minimal government intervention. D. a circular flow of goods, resources, and money.

C. minimal government intervention

5. The demand curve shows the relationship between: A. money income and quantity demanded. B. price and production costs. C. price and quantity demanded. D. consumer tastes and quantity demanded.

C. price and quantity demanded

4. Graphically, the market demand curve is: A. steeper than any individual demand curve that is part of it. B. greater than the sum of the individual demand curves. C. the horizontal sum of individual demand curves. D. the vertical sum of individual demand curves.

C. the horizontal sum of individual demand curves.

3. The law of demand states that, other things equal: A. price and quantity demanded are inversely related. B. the larger the number of buyers in a market, the lower will be product price. C. price and quantity demanded are directly related. D. consumers will buy more of a product at high prices than at low prices.

A. price and quantity demanded are inversely related.