1. Economics Online study for Lesson #6 “Prices as Signals”

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4. Questions #1 Economists main use models to help? Look smart Analyze behavior and predict outcomes Decide what to produce

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6. Questions #2 When the quantity supplied equals quantity demanded, this spot on the graph is called? Equilibrium Surplus Shortage

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8. Questions #3 In the free market, if prices are too high, the the invisible hand will? Force price downward Force prices upward Shift to a new curve

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10. Questions #4 Prices tend to favor? Entrepreneurs Sellers No one (they are neutral) Buyers

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12. Questions #5 Price is a monetary value of a product established by? Government Supply & Demand

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14. Questions #6 Prices are easy to understand because? The government says they are The invisible hand directs them We have had them all our lives

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16. Questions #7 To achieve social goals, prices are set by? The government The free market The invisible hand

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18. Questions #8 The best example price ceilings is? Minimum wage Rent controlled apartments

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20. Questions #9 Understanding the LoD & LoS, if prices are high, it signals? Producers to supply less and people to buy more Government to intervene to protect consumers Producers to supply more and people to buy less Producers to supply less and consumers buy less

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22. Questions #10 At a given price, a surplus occurs when? the quantity demanded is the same as the quantity supplied the quantity supplied is less than the quantity demanded the quantity supplied is greater than the quantity demanded the quantity demanded is more than the quantity supplied

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24. Questions #11 An example of an economic society goal is which? Free markets Federal minimum wage laws Supply & Demand Market clearing price

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26. Questions #12 The LoD tells us which? When prices are high, consumers buy more When prices are low, consumers buy more When prices are low, consumers buy less

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28. Questions #13 Which of the following IS NOT an advantage of prices Prices are neutral War affects prices No cost to administer Prices are a new concept in economics

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30. Questions #14 In a free economy, the market, not government intervention, find its own prices without help TRUE FALSE

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32. Questions #15 Which IS NOT a problem associated with rationing? Competitive Markets Fairness Reduce people’s incentive to work High administrative costs

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34. Questions #16 A rebate is a refund of the full original purchase price. TRUE FALSE

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36. Questions #17 Market equilibrium price is found through? Government Intervention Trial and error Full production capacity Trade with other nations

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38. Questions #18 If there is a surplus, the invisible hand pushes price? Downward Upward

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40. Questions #19 If there is a shortage, the quantity demanded is _______ than the quantity supplied. Greater than Less Than Equal to Market clearing

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42. Questions #20 The set of ideal conditions and outcomes for scarce resources is called? Paradox of Value Competitive Price Theory Theory of Equilibrium Pricing The Friedman Campbell Theory

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45. Test Questions 10 – True / False 10 – Multiple Choice 10 – Matching 5 to 10 – Milton Friedman dvd 5 bonus questions Next Slide

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