Question

7, PRICES IN A MARKET ECONOMY End of Chapter Quiz Answer True (T) or False (F): 1. The goals of all economic groups in a society are usually the same. 2. A shortage means there is too little of a product to meet the demand. 3. A surplus means that suppliers cannot keep up with the demand for a product. 4, when a market is in equilibrium, there is neither a shortage nor a surplus. 5. A surplus may exist when the price of a product is too high. 6. When there is a shortage of a product, suppliers may be able to sell the product for a higher price. 7. When Mrs. Clark of Blossom Farms did research on how many customers she was likely to have, she was trying to determine market size 8. When Mrs. Clark did research on how much flower shops would pay for her carnations, she was trying to find out if she would have any competition. en Mrs. Clark did research on how many other growers were producing carnations, she was trying to determine production costs. 9. Wh 10. Mrs. Clark found that flower shops were willing to buy more carnations at a low cost than at a high cost. _11. Mrs. Clark found that other growers were willing to produce more 12. The equilibrium price for carnations is the price at which the supply and the demand meet. 13. At the equilibrium price, Mrs. Clark cannot sell enough carnations to make a profit. 14. Mrs. Clark found that many customers were willing to buy her carnations at a slightly higher price because her flowers were fresh and of very good quality. This is an example of a non-price factor. _ 15. If other growers began producing carnations in Mrs. Clark's area, the competition would probably drive prices up. 61

Answer 1

1) It is generally seen that the goals of all economic agents in the society are not the same. For example, consumers may prefer a lower price level while producers may prefer a high one.

Therefore, the given statement is false.

2) The given statement is true.

3) A surplus refers to a situation where supply of a good exceeds its demmand.

Therefore, the given statement is false.

4) The given statement is true.

5) When price is high, producers may produce more than optimum triggering a surplus.

Therefore, the given statement is true.

6) In shortage, as the demand exceeds the supply, the producers may be able to sell the product at a higher price.

Therefore, the given statement is true.

7) The given statement is true.

8) The given statement is false.

9) Here Mrs. Clark is trying to find out if she would have any competition.

Therefore; the given statement is false.

10) The given statement is true.

11) The other growers will be willing to sale more carnations at a higher cost than at lower cost.

Therefore, the given statement is false.

12) The given statement is true.

13) The given statement is false.

14) The given statement is true.

15) Here the competition will drive prices down.

Therefore, the given statement is false.