M1 Practice

If the law of demand applies to this good, then Q1 could be

0.

If these are the only two sellers in the market, then the market quantity supplied at a price of $4 is

14 units.

If consumers often purchase muffins to eat while they drink their lattés at local coffee shops, what would happen to the equilibrium price and quantity of lattés if the price of muffins rises?

Both the equilibrium price and quantity would decrease.

Which of the following events must result in a higher price in the market for Snickers?

Demand for Snickers increases, and supply of Snickers decreases.

Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market?

Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

Which of the following is not an example of the opportunity cost of going to school?

The money a student spends on rent for his apartment while attending school.

Which of the following goods is both excludable and rival in consumption?

a wristwatch

The movement from point A to point B on the graph shows

an increase in quantity demanded.

In a market economy, who makes the decisions that guide most economic activity?

firms and households

In competitive markets,

firms produce identical products.

In the circular-flow diagram, which of the following items flows from households to firms through the markets for goods and services?

dollars spent on goods and services

A cable television broadcast of a movie is

excludable and not rival in consumption.

When a surplus exists in a market, sellers

lower price, which increases quantity demanded and decreases quantity supplied, until the surplus is eliminated.

Most lighthouses are operated by the government because

of the free-rider problem.

If the price of gasoline rises, when is the price elasticity of demand likely to be the highest?

one year after the price increase

The invisible hand works to promote general well-being in the economy primarily through

people's pursuit of self-interest.

For a good that is a necessity, demand

tends to be inelastic.

The second number in any ordered pair is

the y-coordinate

The demand for a good or service is determined by

those who buy the good or service