Question

the role of price in free market quick check

The price system is an important component of the market because it _____.(1 point)
Responses

prevents spillover effects from occurring
prevents spillover effects from occurring

ensures that producers are able to profit
ensures that producers are able to profit

guarantees that consumers get the goods that they want
guarantees that consumers get the goods that they want

coordinates the activities of producers, consumers, and owners of resources

Answer 1

The price system is an important component of the market because it **coordinates the activities of producers, consumers, and owners of resources.**

Answer 2

A recent diet trend has made snack cakes far less popular than they once were. As such, demand for snack cakes is expected to fall. As demand falls, _____.(1 point)
Responses

consumers face higher prices, and are encouraged to consume less
consumers face higher prices, and are encouraged to consume less

producers make lower profits, and some will exit the market
producers make lower profits, and some will exit the market

consumers face lower prices, and are encouraged to consume more
consumers face lower prices, and are encouraged to consume more

producers make higher profits, and more will enter the market

Answer 3

As demand falls, **producers make lower profits, and some will exit the market.**

Answer 4

In a free market economy, what signal do high prices send?(1 point)
Responses

The government should intervene to protect consumers.
The government should intervene to protect consumers.

Producers should supply less and consumers should buy more.
Producers should supply less and consumers should buy more.

Producers should supply more and consumers should buy less.
Producers should supply more and consumers should buy less.

Producers should supply less and consumers should buy less.
Producers should supply less and consumers should buy less.

Answer 5

In a free market economy, high prices send the signal that **producers should supply more and consumers should buy less.**

Answer 6

Falling oil prices would significantly lower the cost of production for many goods. Producers of plastic kayaks, for instance, would be able to produce larger quantities of their product given the decrease in input costs. Which of the following illustrates how consumers respond to the price incentive brought about by the subsequent increase in supply?(1 point)
Responses

Rising prices lead consumers to purchase fewer kayaks.
Rising prices lead consumers to purchase fewer kayaks.

Falling prices lead consumers to purchase fewer kayaks.
Falling prices lead consumers to purchase fewer kayaks.

Rising prices lead consumers to purchase more kayaks.
Rising prices lead consumers to purchase more kayaks.

Falling prices lead consumers to purchase more kayaks.

Answer 7

The correct response is: **Falling prices lead consumers to purchase more kayaks.**