Week 2 Quiz

An illustrative country lets private owners run most shops and farms at prices set by buyers and sellers, while its government sets safety rules, collects taxes, and runs some services. Which economic system does it run?

Select one.

• A market economy, because private owners run most shops and farms
• A command economy, because the government sets rules
• A mixed economy, because private markets and a government role are combined
• Socialism, because the government collects taxes

In the illustrative farmers'-market strawberry schedule: at 2, 3, 4, 5, 6, and 7 dollars a pint, buyers want 700, 600, 500, 400, 300, and 200 pints, and sellers offer 100, 200, 300, 400, 500, and 600 pints, what are the equilibrium price and amount?

Select one.

• 4 dollars and 500 pints
• 5 dollars and 400 pints
• 6 dollars and 300 pints
• 5 dollars and 800 pints

In the illustrative farmers'-market strawberry schedule: at 2, 3, 4, 5, 6, and 7 dollars a pint, buyers want 700, 600, 500, 400, 300, and 200 pints, and sellers offer 100, 200, 300, 400, 500, and 600 pints, what happens at a price of 4 dollars a pint?

Select one.

• A surplus of 200 pints
• A shortage of 500 pints
• A shortage of 800 pints
• A shortage of 200 pints

In the illustrative farmers'-market strawberry schedule: at 2, 3, 4, 5, 6, and 7 dollars a pint, buyers want 700, 600, 500, 400, 300, and 200 pints, and sellers offer 100, 200, 300, 400, 500, and 600 pints, which statement describes the market at a price of 6 dollars a pint?

Select one.

• A surplus of 200 pints, and the price tends to fall
• A shortage of 200 pints, and the price tends to rise
• A surplus of 200 pints, and the price tends to rise
• A surplus of 500 pints, and the price tends to fall

At an illustrative strawberry stand priced at 4 dollars a pint, the berries are gone before lunch. A shopper says the growers must have run out through poor planning. Which explanation fits this week's model better?

Select one.

• The growers ran out by bad luck, so the price has nothing to do with it
• The price sits below equilibrium, so buyers want more than sellers offer
• The price sits above equilibrium, so sellers offer more than buyers want
• The stand is a monopoly, so it chose to sell fewer berries

In the illustrative farmers'-market strawberry schedule: at 2, 3, 4, 5, 6, and 7 dollars a pint, buyers want 700, 600, 500, 400, 300, and 200 pints, and sellers offer 100, 200, 300, 400, 500, and 600 pints, a summer festival adds 200 pints of demand at every price. What is the new equilibrium?

Select one.

• 5 dollars and 600 pints
• 7 dollars and 400 pints
• 6 dollars and 500 pints
• 5 dollars and 400 pints

On the illustrative strawberry schedule, the price rises from 5 to 6 dollars on a normal market day and buyers now want 300 pints instead of 400. This change in the amount buyers want is a shift of demand.

True or false.

• True
• False

The illustrative mobile coffee cart competes with many other sellers of coffee, each drink is a little different, and a new cart can start with modest equipment and a permit. Which market structure does the cart sit in?

Select one.

• Monopoly, because its drinks are its own
• Monopolistic competition
• Oligopoly, because a chain café is nearby
• Perfect competition, because there are many sellers

Which federal law is the first of the three core federal antitrust laws, the laws that police monopoly?

Select one.

• The Clayton Act
• The Federal Trade Commission Act
• The Securities Exchange Act
• The Sherman Act

Congress and the President agree to cut a tax. Which kind of policy is this, and who wields it?

Select one.

• Monetary policy, run by the Federal Reserve
• Fiscal policy, set by Congress and the President
• Fiscal policy, set by the Federal Reserve
• Monetary policy, set by Congress and the President