Question

In any economic system, scarce resources have to be allocated among competing uses. Market economies harness the forces of

	a.	government to allocate scarce resources.
	b.	supply and demand to allocate scarce resources.
	c.	nature to allocate scarce resources.
	d.	credit cards to allocate scarce resources.

The price elasticity of demand measures the

a.

magnitude of the response in quantity demanded to a change in price.

b.

size of the shortage created by the increase in demand.

c.

direction of the shift in the demand curve in response to a market event.

d.

responsiveness of quantity demanded to a change in income.

If the price elasticity of supply is 0.4, and a price increase led to a 5% increase in quantity supplied, then the price increase is about

	a.	1.2%.
	b.	2%.
	c.	0.25%.
	d.	12.5%.

Which of the following is the least likely to be a competitive market?

	a.	ice cream
	b.	soybeans
	c.	cable television
	d.	new houses

Economists speaking like policy advisers make

	a.	claims about how the world is.
	b.	descriptive statements.
	c.	normative statements.
	d.	More than one of the above is correct.

Economists speaking like scientists make

	a.	positive statements.
	b.	prescriptive statements.
	c.	claims about how the world should be.
	d.	More than one of the above is correct.

A decrease in the price of a good will

	a.	increase quantity supplied.
	b.	decrease supply.
	c.	decrease quantity supplied.
	d.	increase supply.