Question

1.

Given a market with one single supplier, would you say…

a.    It is a monopoly there is no competition in the market

b. It is an oligopoly, there is plenty of competition in the market

c.    It is a monopoly, competition depends on the possibility of entrance to the market

d. I hate monopolies, government should do something

2.

The Law of Demand is a derivation of

a.    price controls.

b.    assuming people are rational.

c.    markets in perfect competition.

d.    shortages and surpluses  

3. In “The Use of Knowledge in Society”, Friedrich Hayek emphasizes the use of this type of knowledge as being critically important to the functioning of an economy.

      a.   knowledge of particular circumstances of time and place

      b.   scientific knowledge

      c.   accurate forecasts of GDP growth

      d.   accurate forecasts of inflation

      e.   (c) and (d).

4.

Price controls are necessary because…

a.     businesses owners care about money only and not about people.

b.     they allow people with less resources to have access to those goods and services

c.     they are not necessary the market self-correct through a process of trial and error.

d.     they correct the market failures at a specific moment.

e.     economists are capable to know what the fair price for an exchange is.

5.

Because we live in a world of scarcity

a. every human being has a right to obtain things according to their needs

b. is important to plan the production and distribution of goods in the economy

c.    we need to create jobs by not allowing the importation of goods and labor to the country

d.    we need Economics, choices have a cost and we will always have tradeoffs

Answer 1

1.(c) Market with one single supplier - It is a Monopoly and competition depends on the possibility of entrance of firms to the Market. This is because single supplier in a market is called Monopoly and Competition depends on Barriers to entry and exit of firms.

2.(b) Law of demand is a Derivaton assuming people are Rational. This is because It shows People's Rational Behaviour that is higher price leads to lesser quantity demanded and lesser price leads to higher quantity demanded of goods with given income. Consumer always want higher satisfaction.

3.(A) "The use of Knowledge in Society" by" Fredrich Hayek " emphasises the use of knowledge of particular circumstances of Time and Place. In this Knowlwdge is Decentralised in that each of us has our own personal Knowledge of Time and Place.

4.(b)Price Controls are very necessary because They allow people with less resources to have access to those goods and services.The reason behind implementing price controls can stem from the desire to maintain affiordability of goods even during shortages.

5.(d) Because we live in a world of Scarcity, We need Economics, choices have a cost and we will always have tradeoffs. In our world , we have limited resources but wants are unlimited and Hence arises need of Economics and Trade offs.

3.(a) "The use of Knowledge in Society" by " Fredrich Hayek" emphasises the particular knowledge of Time and Place.