Question 1

The equilibrium quantity is the quantity that:

Accepted Answer

A)  exists when the price is higher than the equilibrium price. 
B)  exists when the price is lower than the equilibrium price. 
C)  exists when supply is greater than demand. 
D)  is both demanded and supplied at the equilibrium price. 
A)  exists when the price is higher than the equilibrium price. 
B)  exists when the price is lower than the equilibrium price. 
C)  exists when supply is greater than demand. 
D)  is both demanded and supplied at the equilibrium price.

Question 2

Use Figure: The Market for Green Chile Scones. A price ceiling has been placed on the market for green chile scones. Which area represents the deadweight loss that occurs as a result of the price ceiling?
​

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 3

There is deadweight loss in the market for cycling classes because the current price is less than the equilibrium price. However, the price is not adjusting upward. What caused this?

Accepted Answer

A)  a price ceiling 
B)  a price floor 
C)  an increase in supply 
D)  a decrease in demand 
A)  a price ceiling 
B)  a price floor 
C)  an increase in supply 
D)  a decrease in demand

Question 4

Why does a decrease in demand cause a decrease in a good's equilibrium price?

Accepted Answer

A)  There is a surplus at the old price, which leads firms to charge a lower price. 
B)  There is a shortage at the old price, which leads firms to charge a lower price. 
C)  A decrease in demand causes a price floor to be placed on a market. 
D)  At the old price, the quantity demanded is greater than the quantity supplied, which leads firms to charge a lower price. 
A)  There is a surplus at the old price, which leads firms to charge a lower price. 
B)  There is a shortage at the old price, which leads firms to charge a lower price. 
C)  A decrease in demand causes a price floor to be placed on a market. 
D)  At the old price, the quantity demanded is greater than the quantity supplied, which leads firms to charge a lower price.

Question 5

Use Figure: The Market for Sandwiches. What happens if a price ceiling of $6 is placed on this market?
​
Figure: The Market for Sandwiches

Accepted Answer

A)  The price ceiling would not affect this market. 
B)  There would be a shortage of eight sandwiches. 
C)  There would be a surplus of eight sandwiches. 
D)  A total of 11 sandwiches will be sold. 
A)  The price ceiling would not affect this market. 
B)  There would be a shortage of eight sandwiches. 
C)  There would be a surplus of eight sandwiches. 
D)  A total of 11 sandwiches will be sold.

Question 6

Why does an increase in supply cause a decrease in a good's equilibrium price?

Accepted Answer

A)  There is a surplus at the old price, which leads firms to charge a lower price. 
B)  There is a shortage at the old price, which leads to firms to charge a lower price. 
C)  An increase in supply causes a decrease in demand. 
D)  An increase in supply causes an increase in demand. 
A)  There is a surplus at the old price, which leads firms to charge a lower price. 
B)  There is a shortage at the old price, which leads to firms to charge a lower price. 
C)  An increase in supply causes a decrease in demand. 
D)  An increase in supply causes an increase in demand.

Question 7

The cost of labor used to produce smartphones increased, and consumers expect the price of smartphones to increase in the future. If it is known that the effect of these changes is greater on demand than it is on supply, what is the effect on equilibrium price and quantity in this market?

Accepted Answer

A)  Price increases, and quantity increases. 
B)  Price decreases, and quantity increases. 
C)  Price decreases, and quantity decreases. 
D)  Price increases, and quantity decreases. 
A)  Price increases, and quantity increases. 
B)  Price decreases, and quantity increases. 
C)  Price decreases, and quantity decreases. 
D)  Price increases, and quantity decreases.

Question 8

Use Figure: The Market for Sandwiches. What happens if the current price of sandwiches is $4?
​
Figure: The Market for Sandwiches

Accepted Answer

A)  There is a shortage. 
B)  There is a surplus. 
C)  Quantity supplied exceeds quantity demanded. 
D)  Quantity supplied equals quantity demanded. 
A)  There is a shortage. 
B)  There is a surplus. 
C)  Quantity supplied exceeds quantity demanded. 
D)  Quantity supplied equals quantity demanded.

Question 9

Use Figure: The Market for Sandwiches II. What does the shaded area in this graph represent?
​
Figure: The Market for Sandwiches II

Accepted Answer

A)  consumer surplus 
B)  shortage 
C)  producer surplus 
D)  deadweight loss 
A)  consumer surplus 
B)  shortage 
C)  producer surplus 
D)  deadweight loss

Question 10

What would sellers do if people wanted to buy less of their good than they are willing to sell at the current price?

Accepted Answer

A)  produce more at the same price 
B)  produce less at a higher price 
C)  produce more at a higher price 
D)  produce less at a lower price 
A)  produce more at the same price 
B)  produce less at a higher price 
C)  produce more at a higher price 
D)  produce less at a lower price

Question 11

How do the price and quantity change in the market for lawn chairs in July if firms expect the price of lawn chairs to go down in August?

Accepted Answer

A)  Price increases, and quantity decreases. 
B)  There is no impact on price, and quantity increases. 
C)  Price decreases, and quantity increases. 
D)  Price increases, and quantity increases. 
A)  Price increases, and quantity decreases. 
B)  There is no impact on price, and quantity increases. 
C)  Price decreases, and quantity increases. 
D)  Price increases, and quantity increases.

Question 12

What happens if an effective price floor is placed on the market for steel?

Accepted Answer

A)  There will be a shortage of steel. 
B)  The price of steel will be lower than the equilibrium price. 
C)  The quality of steel produced will decrease. 
D)  There will be a surplus of steel. 
A)  There will be a shortage of steel. 
B)  The price of steel will be lower than the equilibrium price. 
C)  The quality of steel produced will decrease. 
D)  There will be a surplus of steel.

Question 13

What is an equilibrium price in a market, and what happens when the current price of a good is above that equilibrium price?

Accepted Answer

An equilibrium price is the price that m

Question 14

Evaluate whether this statement is true or false: if black markets can be stopped, then there are no negative impacts of a price ceiling. Explain.

Accepted Answer

This statement is false. Even if black m

Question 15

When supply increases and demand increases, what happens to equilibrium price and quantity?

Accepted Answer

A)  Price always increases, and quantity always decreases. 
B)  We don't know what happens to price without knowing if supply changed more or less than demand; quantity always increases. 
C)  Price always decreases, and quantity always increases. 
D)  Price increases; we don't know what happens to quantity without knowing if supply changed more or less than demand. 
A)  Price always increases, and quantity always decreases. 
B)  We don't know what happens to price without knowing if supply changed more or less than demand; quantity always increases. 
C)  Price always decreases, and quantity always increases. 
D)  Price increases; we don't know what happens to quantity without knowing if supply changed more or less than demand.

Question 16

Use Table: Supply and Demand Schedule for Walking Tours. What price would NOT be an effective price floor?
​

Accepted Answer

A)  $20 
B)  $40 
C)  $50 
D)  $60 
A)  $20 
B)  $40 
C)  $50 
D)  $60

Question 17

What would sellers do if people wanted to buy more of their good than they are willing to sell at the current price?

Accepted Answer

A)  produce more at the same price 
B)  produce less at a higher price 
C)  produce more at a higher price 
D)  produce less at a lower price 
A)  produce more at the same price 
B)  produce less at a higher price 
C)  produce more at a higher price 
D)  produce less at a lower price

Question 18

Use Table: Supply and Demand Schedule for Walking Tours. What is the equilibrium price and quantity in this market?
​

Accepted Answer

A)  Price is $30, and quantity is 70. 
B)  Price is $10 and quantity is 30. 
C)  Price is $60 and quantity is 40. 
D)  Price is $40 and quantity is zero. 
A)  Price is $30, and quantity is 70. 
B)  Price is $10 and quantity is 30. 
C)  Price is $60 and quantity is 40. 
D)  Price is $40 and quantity is zero.

Question 19

Use Figure: The Market for Sandwiches. What price in this market would be an effective price floor?
​
Figure: The Market for Sandwiches

Accepted Answer

A)  $4 
B)  $5 
C)  $6 
D)  $9 
A)  $4 
B)  $5 
C)  $6 
D)  $9

Question 20

The government of Maxistan has imposed a price ceiling in the market for shoes and has been able to prevent black markets from forming. What is true about the market for shoes in Maxistan?

Accepted Answer

A)  No shortages will exist. 
B)  The price will return to the equilibrium price. 
C)  Shoe buyers pay more in the form of queuing costs. 
D)  A price floor will be created. 
A)  No shortages will exist. 
B)  The price will return to the equilibrium price. 
C)  Shoe buyers pay more in the form of queuing costs. 
D)  A price floor will be created.

The equilibrium quantity is the quantity that:

Use Figure: The Market for Green Chile Scones. A price ceiling has been placed on the market for green chile scones. Which area represents the deadweight loss that occurs as a result of the price ceiling?

There is deadweight loss in the market for cycling classes because the current price is less than the equilibrium price. However, the price is not adjusting upward. What caused this?

Why does a decrease in demand cause a decrease in a good's equilibrium price?

Use Figure: The Market for Sandwiches. What happens if a price ceiling of $6 is placed on this market? Figure: The Market for Sandwiches

Why does an increase in supply cause a decrease in a good's equilibrium price?

The cost of labor used to produce smartphones increased, and consumers expect the price of smartphones to increase in the future. If it is known that the effect of these changes is greater on demand than it is on supply, what is the effect on equilibrium price and quantity in this market?

Use Figure: The Market for Sandwiches. What happens if the current price of sandwiches is $4? Figure: The Market for Sandwiches

Use Figure: The Market for Sandwiches II. What does the shaded area in this graph represent? Figure: The Market for Sandwiches II

What would sellers do if people wanted to buy less of their good than they are willing to sell at the current price?

How do the price and quantity change in the market for lawn chairs in July if firms expect the price of lawn chairs to go down in August?

What happens if an effective price floor is placed on the market for steel?

What is an equilibrium price in a market, and what happens when the current price of a good is above that equilibrium price?

Evaluate whether this statement is true or false: if black markets can be stopped, then there are no negative impacts of a price ceiling. Explain.

When supply increases and demand increases, what happens to equilibrium price and quantity?

Use Table: Supply and Demand Schedule for Walking Tours. What price would NOT be an effective price floor?

What would sellers do if people wanted to buy more of their good than they are willing to sell at the current price?

Use Table: Supply and Demand Schedule for Walking Tours. What is the equilibrium price and quantity in this market?

Use Figure: The Market for Sandwiches. What price in this market would be an effective price floor? Figure: The Market for Sandwiches

The government of Maxistan has imposed a price ceiling in the market for shoes and has been able to prevent black markets from forming. What is true about the market for shoes in Maxistan?

Foundations of Economics

Extension: Understanding Graphs

Markets and Economies

Demand

Supply

Elasticity

Consumer Behavior

Production Costs

Perfect Competition

Market Power

Factor Markets

Market Failure and Government Failure

Measuring an Economys Performance

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money and Banking

Monetary Policy

Economic Growth and Development

International Trade and Finance

Filters

Exam 5: Market Equilibrium

The equilibrium quantity is the quantity that:

Use Figure: The Market for Green Chile Scones. A price ceiling has been placed on the market for green chile scones. Which area represents the deadweight loss that occurs as a result of the price ceiling? ​

There is deadweight loss in the market for cycling classes because the current price is less than the equilibrium price. However, the price is not adjusting upward. What caused this?

Why does a decrease in demand cause a decrease in a good's equilibrium price?

Use Figure: The Market for Sandwiches. What happens if a price ceiling of $6 is placed on this market? ​ Figure: The Market for Sandwiches

Why does an increase in supply cause a decrease in a good's equilibrium price?

The cost of labor used to produce smartphones increased, and consumers expect the price of smartphones to increase in the future. If it is known that the effect of these changes is greater on demand than it is on supply, what is the effect on equilibrium price and quantity in this market?

Use Figure: The Market for Sandwiches. What happens if the current price of sandwiches is $4? ​ Figure: The Market for Sandwiches

Use Figure: The Market for Sandwiches II. What does the shaded area in this graph represent? ​ Figure: The Market for Sandwiches II

What would sellers do if people wanted to buy less of their good than they are willing to sell at the current price?

How do the price and quantity change in the market for lawn chairs in July if firms expect the price of lawn chairs to go down in August?

What happens if an effective price floor is placed on the market for steel?

What is an equilibrium price in a market, and what happens when the current price of a good is above that equilibrium price?

Evaluate whether this statement is true or false: if black markets can be stopped, then there are no negative impacts of a price ceiling. Explain.

When supply increases and demand increases, what happens to equilibrium price and quantity?

Use Table: Supply and Demand Schedule for Walking Tours. What price would NOT be an effective price floor? ​

What would sellers do if people wanted to buy more of their good than they are willing to sell at the current price?

Use Table: Supply and Demand Schedule for Walking Tours. What is the equilibrium price and quantity in this market? ​

Use Figure: The Market for Sandwiches. What price in this market would be an effective price floor? ​ Figure: The Market for Sandwiches

The government of Maxistan has imposed a price ceiling in the market for shoes and has been able to prevent black markets from forming. What is true about the market for shoes in Maxistan?

Foundations of Economics

Extension: Understanding Graphs

Markets and Economies

Demand

Supply

Elasticity

Consumer Behavior

Production Costs

Perfect Competition

Market Power

Factor Markets

Market Failure and Government Failure

Measuring an Economys Performance

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money and Banking

Monetary Policy

Economic Growth and Development

International Trade and Finance

Filters

Use Figure: The Market for Green Chile Scones. A price ceiling has been placed on the market for green chile scones. Which area represents the deadweight loss that occurs as a result of the price ceiling?

Use Figure: The Market for Sandwiches. What happens if a price ceiling of $6 is placed on this market? Figure: The Market for Sandwiches

Use Figure: The Market for Sandwiches. What happens if the current price of sandwiches is $4? Figure: The Market for Sandwiches

Use Figure: The Market for Sandwiches II. What does the shaded area in this graph represent? Figure: The Market for Sandwiches II

Use Table: Supply and Demand Schedule for Walking Tours. What price would NOT be an effective price floor?

Use Table: Supply and Demand Schedule for Walking Tours. What is the equilibrium price and quantity in this market?

Use Figure: The Market for Sandwiches. What price in this market would be an effective price floor? Figure: The Market for Sandwiches