Principles of Economics Robert Frank 7th Edition- Test Bank
Chapter 3 Supply and Demand
1) If a country’s economic decisions are made by an individual or small number of individuals, then it has a:
1. A) centralized economy.
2. B) free-market economy.
3. C) capitalist economy.
4. D) o...
Principles of Economics Robert Frank 7th Edition-
Test Bank
Chapter 3 Supply and Demand
1) If a country’s economic decisions are made by an individual or small number of
individuals, then it has a:
1. A) centralized economy.
2. B) free-market economy.
3. C) capitalist economy.
4. D) open economy.
Answer: A
Explanation: In centralized economies, an individual or a small group of individuals
decide what, how, and for whom to produce.
Difficulty: 1 Easy
Topic: What, How, and For Whom? Central Planning Versus the Market
Learning Objective: 03-01 Describe how the demand and supply curves summarize the
behavior of buyers and sellers in the marketplace.
Bloom’s: Remember
AACSB: Reflective
Thinking
Accessibility: Keyboard Navigation
2)A good example of central planning at work in the U.S. is:
1. A) car manufacturers establishing suggested retail prices.
2. B) McDonald’s fries being the same everywhere.
,3. C) unions working with businesses to establish wages.
4. D) New York City’s rent control program.
Answer: D
Explanation: In New York, the rent that can be charged for certain apartments is
regulated by the government.
Difficulty: 1 Easy
Topic: What, How, and For Whom? Central Planning Versus the Market
Learning Objective: 03-01 Describe how the demand and supply curves summarize the
behavior of buyers and sellers in the marketplace.
Bloom’s: Remember
AACSB: Reflective
Thinking
Accessibility: Keyboard Navigation
3) The entire group of buyers and sellers of a particular good or service makes up:
1. A) the demand curve.
2. B) the supply curve.
3. C) a market.
4. D) the equilibrium price and quantity.
Answer: C
Explanation: A market for any good consists of all buyers and sellers of that
good. Difficulty: 1 Easy
Topic: What, How, and For Whom? Central Planning Versus the Market
Learning Objective: 03-01 Describe how the demand and supply curves summarize the
behavior of buyers and sellers in the marketplace.
Bloom’s: Remember
,AACSB: Reflective Thinking
Accessibility: Keyboard
Navigation
4) Suppose you bought three tickets to a concert in advance at the University ticket
window. At the last minute one friend cancelled, so you could use only two of the
tickets. You sold the third ticket just outside the entrance to the concert for more
than the price you had originally paid. Which transaction occurred in a market?
1. A) The advance purchase at the University was the only market transaction.
2. B) The sale that occurred at the concert entrance was the only market
transaction.
3. C) Both the purchase at the University ticket window and the sale at the concert
entrance were market transactions.
4. D) Neither the purchase at the University ticket window nor the sale at the
concert entrance was a market transaction.
Answer: C
Explanation: A market for any good consists of all buyers and sellers of that good. In
both transactions, there was a seller and a buyer.
Difficulty: 2 Medium
Topic: Buyers and Sellers in Markets
Learning Objective: 03-01 Describe how the demand and supply curves summarize the
behavior of buyers and sellers in the marketplace.
Bloom’s: Understand
AACSB: Reflective
Thinking
Accessibility: Keyboard Navigation
5) Suppose you camped out in front of an electronics store to be one of the 200 lucky
people able to purchase the latest gaming system. You bought the system for $350.
Two weeks later you see that the same system can be sold on e-Bay for $600, so you
sell your system. Your market role was as a:
, 1. A) consumer in both markets.
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