Chapter 03MarketsMultiple Choice Questions1.An economy where private individuals who are guided by the invisible hand make decisions is known as a:A.market economy.B.centrally planned economy.C.socialist economy.D.barter economy.2.The term market refers to:A.the physical location where buyers and sellers meet to exchange goods for money.B.the buyers and sellers who trade a particular good or service, not to a physical location.C.the location where buyers go to fulfill their wants and needs.D.a physical or virtual place of exchange.3.The buyers and sellers who trade a particular good or service make up what we call a:A.market.B.store.C.mall.D.barterers.4.Buyers and sellers are included in the market under consideration by:A.their physical proximity.B.the context.C.their preferences.D.the income levels.5.The four important characteristics that define a competitive market are:A.standardized good, full information, no transactions costs, participants are price takers.B.standardized information, finished good, no transactions costs, participants are price makers.C.standardized good, same information for buyer and seller, low transactions costs, participants are price takers.D.standardized good, full information, no transactions costs, participants are price makers.6.A perfectly competitive market is one in which:A.fully informed, price-taking buyers and sellers easily trade a standardized good or service.B.fully informed, price-making buyers and seller easily trade a standardized good or service.C.uninformed, price-taking buyers and sellers easily trade a standardized good or service.D.uninformed, price-making buyers and seller easily trade a standardized good or service.7.A standardized good or service is one:A.for which any two units of it have the same features and are interchangeable.B.for which any two units of it have similar features that could be considered close substitutes.C.for which any two units of it have different, unique features.D.that has very distinguishable characteristics, with each unit being economically unique.8.The best example of a standardized good would be:A.corn.B.a handbag.C.an autographed baseball.D.None of these could be considered a standardized good.9.Transaction costs can be defined as:A.the costs incurred by buyer and seller in agreeing to and executing a sale of goods or services.B.the costs the government must pay to allow for an exchange.C.the costs the government must pay to ensure the execution of a sale of goods or services takes place.D.the costs the government incur to create a structured market for the exchange of buyers and sellers.10.Shopping at a warehouse, such as Sams Club or Costco, allows its members to pay very low prices on the goods and services they buy. Customers who shop at such a store incur:A.transaction costs because they must be members to shop there.B.no transaction costs because they pay prices that are lower than any other location.C.transaction costs because they must buy a product in bulk.D.no transaction costs because members can return any item purchased for any reason.11.In order to sell certified diamonds, the seller must be a certified gemologist. This means the diamond market therefore:A.has incomplete information.B.has transaction costs.C.has price-makers.D.All of these statements are true.12.In economic terminology, a buyer or seller who cannot affect the market price is called a:A.price taker.B.price maker.C.price setter.D.price signaler.13.A price taker is:A.a buyer or seller who cannot affect the market price.B.a buyer or seller who takes the market price and chooses to increase or decrease it.C.a buyer or seller who takes prices in the area and averages them together to set the price for his/her good.D.None of these statements is true.14.The best example of a perfectly competitive market would be the market for:A.grain.B.shoes.C.coffee.D.cameras.15.The market for used cars is not considered perfectly competitive because:A.there is incomplete information.B.the buyers are not price takers.C.the good is not standardized.D.All of these are reasons why the used car market is not considered perfectly competitive.16.Perfectly competitive markets:A.are the most common type of market in our economy.B.are hard to find.C.are made up principally by consumer goods.D.are typically found in industr