What are the 3 functions of the Price Mechanism

Signalling, Rationing and Transmission of Preferences

The law of demand states:

Quantity demanded increases as price decreases

Quantity supplied is the amount of a good or service that:

sellers are willing and able to sell at particular prices

Quantity Demanded is defined as the amount of goods or services that

buyers are willing and able to purchase at particular prices

A market must answer the fundamental questions of:

What, how much, and whom to produce for

What does Adam Smith’s idea of an “invisible hand” represent?

The way the markets coordinate trade.

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Demand, Supply and the Price Mechanism

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Quiz to consolidate an introductory lesson to supply and demand and the price mechanism.

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Questions 19

Answers

1
What is the surplus amount at $99,000
1
9
8
7
2
The Law of Supply states there is an increase in the quantity supplied when
price decreases
price is at equilibrium
price increases
price remains the same
3
Which of these economic goals is most important in a market economy?
Efficiency
Equity
Stability
Security
4
Which point or points would represent (an) inefficient combination(s) of coconuts and fish?
A only
C only
D and B
A and B
5
What are the 3 functions of the Price Mechanism
Rationing, Pricing and Resourcing
Signalling, Rationing and Pricing
How, what and for whom to produce goods for
Signalling, Rationing and Transmission of Preferences
6
At price $99,000 there is
A shortage of supply
Equilibrium
a lot of apartments
A surplus of supply
7
The law of demand states:
Quantity demanded increases as price increases
price isn't a factor in changing quantity demanded
Quantity demanded increases as price decreases
Quantity demanded is always in equilibrium with supply
8
According to the Law of Demand, the demand curve is:
a horizontal line
upward sloping
a vertical line
downward sloping
9
Which point or points represent a combination of coconuts and fish that is not feasible?
A only
D
B and C
A and B
10
Quantity supplied is the amount of a good or service that:
is produced for a particular market
sellers are willing and able to sell at particular prices
buyers are willing and able to purchase
sellers will not produce for less than their price
11
Quantity Demanded is defined as the amount of goods or services that
buyers are able to buy in a market
sellers are willing and able to produce at a particular time
buyers buy all the time
buyers are willing and able to purchase at particular prices
12
Equilibrium is
where demand equals supply
never reached in a free market
where demand is greater than supply
where supply is greater than demand
13
If the price is too low in a market, then
Equilibrium is reached
A shortage will occur
Buyers will buy more
A Surplus will occur
14
How many sodas are demanded at $1.50
350
240
280
890
15
A market must answer the fundamental questions of:
What, how much, and whom to produce for
supply and demand
How, why and where to produce
How much, what and why produce
16
The opportunity cost for Tom to move from point A on the curve to point B is:
5 Coconuts
10 Fish
10 Coconuts
5 Fish
17
What does Adam Smith’s idea of an “invisible hand” represent?
The concern of people for one another.
A power that superheroes possess.
The economic role of governments.
The way the markets coordinate trade.
18
What motive do sellers/suppliers have that drives the Law of Supply?
economic
game
sales
profit
19
Which point(s) would represent an efficient combination of coconuts and fish?
A only
D only
A and B
B and C

Demand, Supply and the Price Mechanism Flashcards | StudBud