Practice Questions
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Which of the following is an example of a public good in the product and factor markets?
National defense is a public good because everyone benefits from it, and no one can be excluded. Other options are incorrect because Private tutoring ...
In a perfectly competitive market, how do consumers influence market structures when determining the price of goods?
Consumers affect prices by how much they want to buy. Other options are incorrect because Some might think that talking directly to sellers changes pr...
In a competitive market, which type of service is most likely to thrive due to the presence of numerous providers and consumer choice?
Homogeneous services are similar and easy to compare. Other options are incorrect because Essential services are needed by everyone, like water or ele...
In a perfectly competitive market, how do consumer preferences influence the pricing strategies of firms operating within that market structure?
Firms in a competitive market listen to what consumers want. Other options are incorrect because Some might think firms can charge more to make more m...
In a competitive market, how do various types of services contribute to economic efficiency?
Services help make sure that resources go where they are needed most. Other options are incorrect because Some might think companies can charge more t...
In a product market, which of the following best describes the role of consumers?
Consumers buy goods and services from producers. Other options are incorrect because This answer suggests that consumers provide goods and services; T...
In factor markets, which of the following represents the demand side of the market?
Firms need workers to help them produce goods and services. Other options are incorrect because This option confuses supply with demand; Regulations a...
In a perfectly competitive market, what happens to the equilibrium price if the demand for a product increases while the supply remains constant?
When more people want to buy a product, the price goes up. Other options are incorrect because Some might think that more demand means lower prices; I...
A local farmer sells his fresh produce at a farmer's market. Which category does this transaction fall under?
This is a product market because the farmer sells goods directly to customers. Other options are incorrect because A factor market is where resources ...
In a scenario where the demand for smartphones increases, how might this affect the labor market for phone manufacturers?
When more people want smartphones, companies need to make more. Other options are incorrect because Some might think that more workers will lower wage...
If a significant increase in demand for electric cars occurs, leading to higher wages for workers in the automotive industry, what is the most likely underlying cause of this wage increase?
When more people want electric cars, companies need more workers to make them. Other options are incorrect because Some might think better training ma...
Which of the following statements accurately describe the relationship between product markets and factor markets? Select all that apply.
None of the statements accurately describe how product markets and factor markets work together. Other options are incorrect because This suggests tha...
Product Market : Goods :: Factor Market : ?
In a factor market, people buy and sell resources like labor. Other options are incorrect because Services are not the same as labor; Prices are not w...
A local bakery decides to increase its production of bread due to a rise in consumer demand. As a result, they hire two additional bakers. How does this scenario illustrate the relationship between product and factor markets?
When more people want bread, the bakery needs to make more. Other options are incorrect because This answer suggests the bakery ignores labor needs; T...
In which market would a company seek to purchase machinery to increase production capacity?
The factor market is where businesses buy resources to make products. Other options are incorrect because Some might think the product market is where...
In the context of microeconomics, the market where factors of production, such as labor, land, and capital, are exchanged is referred to as the __________ market.
The factor market is where resources like workers and machines are bought and sold. Other options are incorrect because The product market is where fi...
Arrange the following steps in the correct order to illustrate the relationship between product markets and factor markets: A. Firms demand factors of production in the factor market B. Workers supply labor to firms in the factor market C. Firms produce goods and services based on the factors acquired D. Consumers purchase goods and services in the product market
This order shows how businesses need workers and resources first. Other options are incorrect because This suggests workers supply labor before firms ...
Master Product and Factor Markets
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