Question 1

There is a positive relationship between price and quantity supplied.

Accepted Answer

A) True 
 B)False

Question 2

If firms produce a quantity that is greater than the equilibrium quantity,then unexploited gains from trade exist.

Accepted Answer

A) True 
 B)False

Question 3

A market surplus can be defined as a situation in which the quantity demanded in a market is less than the quantity supplied,at the given price.

Accepted Answer

A) True 
 B)False

Question 4

Free markets maximize consumer plus producer surplus regardless of the level of competition.

Accepted Answer

A) True 
 B)False

Question 5

When the quantity supplied of a good exceeds the quantity demanded,there is a(n):

Accepted Answer

A)  shortage. 
B)  surplus. 
C)  equilibrium. 
D)  opportunity cost. 
A)  shortage. 
B)  surplus. 
C)  equilibrium. 
D)  opportunity cost.

Question 6

Economic growth in China and India has reduced the world supply of oil.

Accepted Answer

A) True 
 B)False

Question 7

If the equilibrium price is achieved,all willing demanders become buyers.

Accepted Answer

A) True 
 B)False

Question 8

Use the following to answer questions 
Figure: Chocolate  
-(Figure: Chocolate)What is the equilibrium price per pound in the diagram?

Accepted Answer

A)  $4 
B)  $6 
C)  $8 
D)  $10 
A)  $4 
B)  $6 
C)  $8 
D)  $10

Question 9

If supply decreases,ceteris paribus,the quantity exchanged will be ______ at the new market equilibrium point.

Accepted Answer

A)  larger 
B)  smaller 
C)  the same 
D)  either larger or smaller 
A)  larger 
B)  smaller 
C)  the same 
D)  either larger or smaller

Question 10

In a market diagram,demand and supply cross each other at the equilibrium point.

Accepted Answer

A) True 
 B)False

Question 11

If supply increases,ceteris paribus,the quantity exchanged will be ______ at the new market equilibrium point.

Accepted Answer

A)  larger 
B)  smaller 
C)  the same 
D)  either larger or smaller 
A)  larger 
B)  smaller 
C)  the same 
D)  either larger or smaller

Question 12

The equilibrium price is:

Accepted Answer

A)  the price at which quantity demanded is equal to quantity supplied. 
B)  never higher than what most consumers are willing to pay. 
C)  unstable. 
D)  the highest price at which all consumers can afford a good. 
A)  the price at which quantity demanded is equal to quantity supplied. 
B)  never higher than what most consumers are willing to pay. 
C)  unstable. 
D)  the highest price at which all consumers can afford a good.

Question 13

If demand increases,ceteris paribus,the quantity exchanged will be ______ at the new market equilibrium point.

Accepted Answer

A)  larger 
B)  smaller 
C)  the same 
D)  either larger or smaller 
A)  larger 
B)  smaller 
C)  the same 
D)  either larger or smaller

Question 14

An increase in supply and a decrease in demand occur in a market.What happens to the equilibrium price and quantity?

Accepted Answer

A)  The equilibrium price decreases;the change in the equilibrium quantity is uncertain. 
B)  The equilibrium price decreases;the equilibrium quantity increases. 
C)  The equilibrium price increases;the change in the equilibrium quantity is uncertain. 
D)  The equilibrium price increases;the equilibrium quantity decreases. 
A)  The equilibrium price decreases;the change in the equilibrium quantity is uncertain. 
B)  The equilibrium price decreases;the equilibrium quantity increases. 
C)  The equilibrium price increases;the change in the equilibrium quantity is uncertain. 
D)  The equilibrium price increases;the equilibrium quantity decreases.

Question 15

Gains from trade are maximized when:

Accepted Answer

A)  the market price is higher than the equilibrium price. 
B)  the market price is less than the equilibrium price. 
C)  the market price is equal to the equilibrium price. 
D)  there are additional potential trades available that have not been completed. 
A)  the market price is higher than the equilibrium price. 
B)  the market price is less than the equilibrium price. 
C)  the market price is equal to the equilibrium price. 
D)  there are additional potential trades available that have not been completed.

Question 16

When demand increases there is a ______ at the old equilibrium price,which puts ______ pressure on price until the market reaches the new equilibrium.

Accepted Answer

A)  surplus;downward 
B)  surplus;upward 
C)  shortage;upward 
D)  shortage;downward 
A)  surplus;downward 
B)  surplus;upward 
C)  shortage;upward 
D)  shortage;downward

Question 17

A decrease in demand for a good will lead to a decrease in the price of the good,but an increase in the quantity supplied.

Accepted Answer

A) True 
 B)False

Question 18

If a market has a surplus,how will the market respond?

Accepted Answer

A)  The price will fall and the quantity supplied will fall. 
B)  The price will fall and the quantity supplied will rise. 
C)  The price will rise and the quantity supplied will fall. 
D)  The price will rise and the quantity supplied will rise. 
A)  The price will fall and the quantity supplied will fall. 
B)  The price will fall and the quantity supplied will rise. 
C)  The price will rise and the quantity supplied will fall. 
D)  The price will rise and the quantity supplied will rise.

Question 19

In a free market setting where quantity supplied is 40 units and quantity demanded is 50 units,price will:

Accepted Answer

A)  rise. 
B)  fall. 
C)  remain the same. 
D)  move in an indeterminate direction. 
A)  rise. 
B)  fall. 
C)  remain the same. 
D)  move in an indeterminate direction.

Question 20

If equilibrium price increases while equilibrium quantity decreases,then we know that:

Accepted Answer

A)  market demand has increased. 
B)  market demand has decreased. 
C)  market supply has decreased. 
D)  market supply has increased. 
A)  market demand has increased. 
B)  market demand has decreased. 
C)  market supply has decreased. 
D)  market supply has increased.

Exam 4: Equilibrium- How Supply and Demand

There is a positive relationship between price and quantity supplied.

If firms produce a quantity that is greater than the equilibrium quantity,then unexploited gains from trade exist.

A market surplus can be defined as a situation in which the quantity demanded in a market is less than the quantity supplied,at the given price.

Free markets maximize consumer plus producer surplus regardless of the level of competition.

When the quantity supplied of a good exceeds the quantity demanded,there is a(n):

Economic growth in China and India has reduced the world supply of oil.

If the equilibrium price is achieved,all willing demanders become buyers.

Use the following to answer questions Figure: Chocolate -(Figure: Chocolate)What is the equilibrium price per pound in the diagram?

If supply decreases,ceteris paribus,the quantity exchanged will be ______ at the new market equilibrium point.

In a market diagram,demand and supply cross each other at the equilibrium point.

If supply increases,ceteris paribus,the quantity exchanged will be ______ at the new market equilibrium point.

The equilibrium price is:

If demand increases,ceteris paribus,the quantity exchanged will be ______ at the new market equilibrium point.

An increase in supply and a decrease in demand occur in a market.What happens to the equilibrium price and quantity?

Gains from trade are maximized when:

When demand increases there is a ______ at the old equilibrium price,which puts ______ pressure on price until the market reaches the new equilibrium.

A decrease in demand for a good will lead to a decrease in the price of the good,but an increase in the quantity supplied.

If a market has a surplus,how will the market respond?

In a free market setting where quantity supplied is 40 units and quantity demanded is 50 units,price will:

If equilibrium price increases while equilibrium quantity decreases,then we know that:

The Big Ideas

The Power of Trade

Supply and Demand

Price Ceilings and Floors

GDP and the Measurement of Progress

The Wealth of Nations and Economic Growth

Growth,capital Accumulation

Saving,investment,and the Financial System

Stock Markets and Personal Finance

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Business Fluctuations

Transmission and Amplification Mechanisms

The Federal Reserve System

Monetary Policy

The Federal Budget- Taxes and Spending

Fiscal Policy

International Trade

International Finance

Political Economy and Public Choice

Filters

When demand increases there is a at the old equilibrium price,which puts pressure on price until the market reaches the new equilibrium.