Economics Chapter 6 Test Question with
Correct Answers
1. 3 reasons why prices effectively perform the allocation function - ANS
✔1.)Prices favor neither the producer nor the consumer
2.)Prices are easily understood
3.)Competitive markets find their own prices without interference
2. The federal minimum wage law demonstrates - ANS ✔a societal choice
for economic equity over efficiency
3. In a market economy, a high price is a signal for - ANS ✔producers to
supply more and consumers to buy less
4. Deficiency payments are part of a federal program to assist - ANS
✔farmers
5. The theory of competitive pricing - ANS ✔is a set of ideal conditions and
outcomes
, 6. All the characteristics of allocation by rationing - ANS ✔1.) lack of fairness
2.) high administrative costs
3.) diminished incentive for workers
7. At a given price, a surplus occurs when - ANS ✔the quantity supplies is
greater that the quantity demanded
8. The demand for gold increases when - ANS ✔economic or political
conditions are unstable
9. Prices enable a market economy to adjust to unexpected events by - ANS
✔adjusting consumption and production
10.If a competitive market is at equilibrium, and if there is a sudden increase
in demand, then a temporary - ANS ✔shortage will occur and the price will
increase
11.What is determined by supply and demand? - ANS ✔price, or monetary
value of an item
Correct Answers
1. 3 reasons why prices effectively perform the allocation function - ANS
✔1.)Prices favor neither the producer nor the consumer
2.)Prices are easily understood
3.)Competitive markets find their own prices without interference
2. The federal minimum wage law demonstrates - ANS ✔a societal choice
for economic equity over efficiency
3. In a market economy, a high price is a signal for - ANS ✔producers to
supply more and consumers to buy less
4. Deficiency payments are part of a federal program to assist - ANS
✔farmers
5. The theory of competitive pricing - ANS ✔is a set of ideal conditions and
outcomes
, 6. All the characteristics of allocation by rationing - ANS ✔1.) lack of fairness
2.) high administrative costs
3.) diminished incentive for workers
7. At a given price, a surplus occurs when - ANS ✔the quantity supplies is
greater that the quantity demanded
8. The demand for gold increases when - ANS ✔economic or political
conditions are unstable
9. Prices enable a market economy to adjust to unexpected events by - ANS
✔adjusting consumption and production
10.If a competitive market is at equilibrium, and if there is a sudden increase
in demand, then a temporary - ANS ✔shortage will occur and the price will
increase
11.What is determined by supply and demand? - ANS ✔price, or monetary
value of an item
