2) Market equilibrium occurs when
A) the quantity demanded equals the quantity supplied.
B) the market is changing rapidly.
C) other things remain the same.
D) buyers get the lowest possible price.
E) everyone who wants the good gets the quantity he or she wants.
3) Market equilibrium
i. can never occur because there are always people who want a good but cannot afford it.
ii. occurs at the intersection of the supply and demand curves.
iii. is the point where the price equals the quantity.
A) ii only
B) iii only
C) ii and iii
D) i only
E) i and ii
4) A surplus of cardboard boxes means that
A) at the current price of a cardboard box, the quantity demanded exceeds the quantity supplied.
B) at the current price of a cardboard box, the quantity demanded is less than the quantity
supplied.
C) the current price of a cardboard box is less than the equilibrium price.
D) at the current price of a cardboard box, the quantity demanded equals the quantity supplied
and the price will fall to restore the equilibrium..
E) More information is needed to determine if the price of cardboard boxes is higher than, lower
than, or equal to the equilibrium price.
5) When there is a surplus of snowboards, the
A) demand for snowboards is greater than the supply of snowboards.
B) supply of snowboards is greater than the demand for snowboards.
C) quantity of snowboards demanded is greater than the quantity of snowboards supplied.
D) quantity of snowboards supplied is greater than the quantity of snowboards demanded.
E) the price rises to restore the equilibrium.
6) If there is a surplus of tacos, then the
A) quantity of tacos demanded equals the quantity of tacos supplied.
B) quantity of tacos demanded is greater than the quantity of tacos supplied.
C) quantity of tacos demanded is less than the quantity of tacos supplied.
D) market is at equilibrium.
E) supply curve of tacos will shift leftward to eliminate the surplus.
7) When a surplus of rice occurs,
A) the price of rice rises.
B) the price of rice falls.
C) there is a balance between the forces of supply and demand.
D) the quantity demanded is greater than quantity supplied at the current price.
E) the demand curve shifts rightward and the supply curve shifts leftward to eliminate the
surplus.
8) Suppose the equilibrium price of oranges is $2.00 per pound. If the actual price is above the
equilibrium price a
A) shortage exists and the price falls to restore equilibrium.
B) shortage exists and the price rises to restore equilibrium.
C) surplus exists and the price falls to restore equilibrium.
D) surplus exists and the price rises to restore equilibrium.
E) surplus exists but nothing happens until either the demand or the supply changes.
9) Suppose the current price of a pound of steak is $12 per pound and the equilibrium price is $9
per pound. In this case, there is a
A) shortage, so the price falls and quantity demanded increases.
B) surplus, so the price falls and quantity demanded increases.
C) shortage, so the price rises and quantity demanded decreases.
D) surplus, so the price rises and quantity demanded increases.
E) surplus, so the price falls and quantity supplied increases.
10) As a falling price eliminates a surplus in the jersey market,
A) the demand curve for jerseys shifts leftward and the supply curve of jerseys shifts rightward.
B) consumers increase the quantity of jerseys they demand.
C) producers increase the quantity of jerseys they supply.
D) producers decrease the quantity of jerseys they supply and buyers decrease the quantity of
jerseys they demand.
E) the demand curve for jerseys shifts rightward and the supply curve of jerseys shifts leftward.
11) If the price is below the equilibrium price,
A) there is a surplus.
B) there is a shortage.
C) the supply curve will shift rightward.
D) the supply curve will shift leftward.
E) the demand curve will shift leftward.
12) When there is a shortage of parking spaces at your college, the
A) demand for parking spaces is greater than the supply.
B) supply of parking spaces is greater than the demand.
C) quantity of parking spaces supplied is greater than the quantity of parking spaces demanded.
D) quantity of parking spaces demanded is greater than the quantity of parking spaces supplied.
E) Both answers A and D are correct.
13) If the price of carrots is below the equilibrium price, the
A) quantity demanded of carrots exceeds the quantity supplied and a surplus exists.
B) quantity supplied of carrots exceeds the quantity demanded and a surplus exists.
C) quantity demanded of carrots exceeds the quantity supplied and a shortage exists.
D) quantity supplied of carrots exceeds the quantity demanded and a shortage exists.
E) quantity supplied of carrots equals the quantity demanded.
14) Suppose the current price of a pound of steak is $6 per pound and the equilibrium price is $9
per pound. What takes place?
A) There is a shortage, so the price falls and quantity demanded increases.
B) There is a surplus, so the price falls and quantity demanded increases.
C) There is a shortage, so the price rises and quantity demanded decreases.
D) There is a shortage, so the price rises and quantity demanded increases.
E) There is a shortage, so the price falls and quantity demanded decreases.
15) The table above shows the situation in the gasoline market in Tulsa, Oklahoma. If the price
of a gallon of gasoline is $3.65, then
A) there is a surplus of gasoline in Tulsa.
B) there is a shortage of gasoline in Tulsa.
C) the gasoline market in Tulsa is in equilibrium.
D) without more information we cannot determine if there is a surplus, a shortage, or an
equilibrium in the gasoline market in Tulsa.
E) there is neither a surplus nor a shortage but the market is NOT in equilibrium.
16) The table above shows the situation in the gasoline market in Tulsa, Oklahoma. If the price
of a gallon of gasoline is $3.73, then
A) there is a surplus of gasoline in Tulsa.
B) there is a shortage of gasoline in Tulsa.
C) the gasoline market in Tulsa is in equilibrium.
D) without more information we cannot determine if there is a surplus, a shortage, or an
equilibrium in the gasoline market in Tulsa.
E) there is neither a surplus nor a shortage but the market is NOT in equilibrium.
17) The table above shows the situation in the gasoline market in Tulsa, Oklahoma. If the price
of a gallon of gasoline is $3.62, then
A) there is a surplus of gasoline in Tulsa.
B) there is a shortage of gasoline in Tulsa.
C) the gasoline market in Tulsa is in equilibrium.
D) without more information we cannot determine if there is a surplus, a shortage, or an
equilibrium in the gasoline market in Tulsa.
E) there is neither a surplus nor a shortage but the market is NOT in equilibrium.
18) Using the data in the table above, the equilibrium quantity and equilibrium price for a
cellular telephone is
A) 50,000 and $100.
B) 80,000 and $80.
C) 60,000 and $50.
D) 40,000 and $20.
E) 100,000 and $20.
19) Using the data in the table above, at the price of $80 a phone,
A) a shortage of 25,000 cellular telephones occurs.
B) a surplus of 80,000 cellular telephones occurs.
C) a surplus of 25,000 cellular telephones occurs.
D) a shortage of 55,000 cellular telephones occurs.
E) the market is in equilibrium.
20) Using the data in the table above, the equilibrium quantity and equilibrium price for a stapler
is
A) 10,000 and $8.
B) 90,000 and $8.
C) 100,000 and $5.
D) 70,000 and $6.
E) 60,000 and $5.
21) Using the data in the table above, if the price of a stapler is $8, then there is a ________ of
staplers and the quantity of staplers demanded ________ the quantity of staplers supplied.
A) surplus; is greater than
B) surplus; is less than
C) shortage; is greater than
D) shortage; is less than
E) neither a surplus nor a shortage; equals
22) Using the data in the table above, if the price of a stapler is $5, then there is a ________ of
staplers and the quantity of staplers demanded ________ the quantity of staplers supplied.
A) surplus; is greater than
B) surplus; is less than
C) shortage; is greater than
D) shortage; is less than
E) neither a surplus nor a shortage; equals
23) In the figure above, a price of $35 per dozen roses results in
A) a shortage.
B) equilibrium.
C) a surplus.
D) upward pressure on the price of roses.
E) an eventual rightward shift of the demand curve and/or leftward shift of the supply curve.
24) In the figure above, a price of $15 per dozen roses results in
A) equilibrium.
B) a shortage.
C) a surplus.
D) downward pressure on the price of roses.
E) an eventual leftward shift of the demand curve and/or rightward shift of the supply curve.
25) The above figure shows the market for game day t-shirts. If the price of t-shirts is $8, then
A) there is a shortage and the price of t-shirts will rise.
B) there is a surplus and the price of t-shirts will rise.
C) the market is in equilibrium.
D) there is a shortage and the price of t-shirts will fall.
E) there is a surplus and the price of t-shirts will fall.
26) The above figure shows the market for game day t-shirts. If the price of t-shirts is $10, then
A) there is a surplus and the price of t-shirts will rise.
B) there is a shortage and the price of t-shirts will rise.
C) there is a shortage and the price of t-shirts will fall.
D) there is a surplus and the price of t-shirts will fall.
E) the market is in equilibrium.
27) The above figure shows the market for game day t-shirts. If the price of t-shirts is $12, then
A) there is a shortage and the price of t-shirts will fall.
B) there is a shortage and the price of t-shirts will rise.
C) there is a surplus and the price of t-shirts will rise.
D) there is a surplus and the price of t-shirts will fall.
E) the market is in equilibrium.
28) The above figure shows the market for game day t-shirts. If the price of t-shirts is $8, then
A) the market is in equilibrium.
B) there is a surplus and the price of t-shirts will rise.
C) the quantity demanded is greater than quantity supplied.
D) there is a shortage and the price of t-shirts will fall.
E) there is a surplus and the price of t-shirts will fall.
29) Assume a competitive market is in equilibrium. There is an increase in demand, but no
change in supply. As a result the equilibrium price ________, and the equilibrium quantity is
________.
A) rises; increases
B) rises; does not change
C) falls; does not change
D) falls; decreases
E) falls; increases
30) If a market begins in equilibrium and then the demand curve shifts leftward, a
A) shortage is created, which is eliminated by a fall in price.
B) shortage is created, which is eliminated by a rise in price.
C) surplus is created, which is eliminated by a fall in price.
D) surplus is created, which is eliminated by a rise in price.
E) surplus is created, which is eliminated by the supply curve shifting leftward.
31) When the demand curve shifts rightward and the market moves to a new equilibrium, then
the
A) supply increases.
B) supply decreases.
C) quantity supplied increases.
D) quantity supplied decreases.
E) price falls to restore the equilibrium.
32) If consumers buy a large number of plug-in electric cars, the equilibrium price of electricity
will ________ and the equilibrium quantity of electricity will ________.
A) rise; increase
B) rise; decrease
C) fall; increase
D) fall; decrease
E) not change; increase
33) Because of a sharp increase in the price of gasoline, the demand for Sports Utility vehicles
(SUVs) has decreased. So, the high price of gasoline leads to a
A) leftward shift of the demand curve for SUVs and the supply curve of SUVs.
B) leftward shift of the demand curve for SUVs and no shift in the supply curve of SUVs.
C) leftward shift of the demand curve for SUVs and a rightward shift of the supply curve of
SUVs.
D) leftward shift of the supply curve of SUVs and no shift in the demand curve for SUVs.
E) rightward shift of the supply curve of SUVs and no shift in the demand curve for SUVs.
34) If the price of tangerines increases, the price of oranges also rises because
A) consumers consider the two goods complements and so sellers decreased the supply of
oranges.
B) consumers consider the two goods substitutes and demand for oranges increases.
C) if the supply of tangerines decreased, then the supply of oranges also must decrease.
D) buyers must have expected a higher price for oranges and thus increased their demand for
oranges.
E) buyers’ incomes must have decreased and oranges are an inferior good.
35) Suppose that the equilibrium price and quantity of new houses both increase. Which of the
following could be a cause of this change?
A) Both the supply and the demand for new houses increased and the supply increased by more
than the demand.
B) The demand for new houses increased and the supply did not change.
C) Both the supply and demand for new houses decreased.
D) The supply of new houses decreased and the demand for new houses did not change.
E) The supply of new houses increased and the demand for new houses did not change.
36) Suppose that the equilibrium price and quantity of new houses both increase. Which of the
following could be a cause of this change?
A) The wage paid carpenters who build new houses might have risen.
B) A technological advance in framing a new house might have occurred.
C) The rent for nearby apartments might have fallen.
D) More home buyers might have moved into the area.
E) The cost of wood framing used to build houses might have fallen.
37) Suppose that over the next few years the demand for dancing to country and western music
decreases. Hence, at country and western dance clubs the equilibrium price of admission
________ and the equilibrium quantity of dancing ________.
A) rises; increases
B) rises; decreases
C) falls; increases
D) falls; decreases
E) does not change; decreases
38) For consumers, taco chips and salsa are complements. If the price of salsa rises, what is the
effect on the equilibrium price and quantity of taco chips?
A) The equilibrium price of taco chips falls and the equilibrium quantity decreases.
B) The equilibrium price of taco chips rises and the equilibrium quantity decreases.
C) There is no change in the equilibrium price of taco chips and the equilibrium quantity
increases.
D) The equilibrium price of taco chips could rise, fall, or stay the same and the equilibrium
quantity increases.
E) The equilibrium price of taco chips rises and the equilibrium quantity increases.
39) Computer chips are a normal good. Suppose the economy slips into a recession so that
income falls. As a result, the demand for computer chips ________ so that the price of a
computer chip ________.
A) increases; rises
B) increases; falls
C) decreases; rises
D) decreases; falls
E) decreases; does not change
40) Bagels and cream cheese are complementary goods. Suppose that the price for flour, which
is used to produce bagels, increases. The equilibrium price of cream cheese ________ and the
equilibrium quantity of cream cheese ________.
A) rises; decreases
B) rises; increases
C) falls; decreases
D) does not change; does not change
E) falls; increases
41) Suppose that people decide riding scooters is no longer fun. The equilibrium price of a
scooter ________ and the equilibrium quantity of scooters ________.
A) rises; increases
B) rises; decreases
C) falls; increases
D) falls; decreases
E) does not change; decreases
42) Assume a market is in equilibrium. There is an increase in supply, but no change in demand
As a result the equilibrium price is ________, and the equilibrium quantity is ________.
A) rises; increases
B) rises; decreases
C) rises; does not change
D) falls; decreases
E) falls; increases
43) If good weather conditions results in a larger than normal crop of peaches, then the
A) equilibrium price of peaches rises and the equilibrium quantity of peaches increases.
B) equilibrium price of peaches falls and the equilibrium quantity of peaches increases.
C) demand curve for peaches shifts leftward.
D) increase in the supply of peaches induces a greater demand for peaches, so that the
equilibrium price rises and the equilibrium quantity increases.
E) equilibrium price of peaches falls and the equilibrium quantity of peaches decreases.
44) The initial equilibrium price in the market for Web pages is $200 per page and 1000 Web
pages are created in a month. Many new Web design firms now enter the market. As a result,
A) the supply of Web pages increases and the price falls.
B) the supply curve of Web pages shifts leftward and the price falls.
C) the demand for Web pages increases and the price rises.
D) the supply of web pages increase and the price falls, which then increases the demand for
Web pages and the demand curve shifts rightward.
E) the demand for Web pages increases and the price falls.
45) Which of the following lower the equilibrium price of a canoe?
A) an increase in the supply of canoes
B) an increase in the demand for canoes
C) an increase in the quantity of canoes supplied
D) a decrease in the supply of canoes
E) Both answers A and B are correct.
46) When personal computers were first produced, the price was very high. As time passed, the
price of personal computers fell because
A) the demand for personal computers decreased.
B) the initial price was too high and nobody bought personal computers.
C) there were technological advances in the production of personal computers.
D) people’s incomes increased and personal computers are an inferior good.
E) None of the above answers is correct.
47) If a freeze destroys oranges before they are harvested, the equilibrium price of an orange
________ and the equilibrium quantity ________.
A) rises; increases
B) rises; decreases
C) falls; increases
D) falls; decreases
E) does not change; decreases
48) Suppose that the price of bread rises. This rise could be the result of
A) a decrease in the supply of bread.
B) an increase in the supply of bread.
C) a decrease in the demand for bread.
D) Both answers A and C are correct.
E) Both answers B and C are correct.
49) If an early frost destroys most of the apple crop, the equilibrium price of an apple ________
and the equilibrium quantity ________.
A) rises; increases
B) rises; decreases
C) falls; increases
D) falls; decreases
E) does not change; decreases
50) In Great Britain, raising taxes on gasoline has increased the costs of supplying gasoline. As a
result, the equilibrium quantity of gasoline ________ and the equilibrium price of gasoline
________.
A) increases; rises
B) increases; falls
C) decreases; rises
D) decreases; falls
E) does not change; rises
51) Suppose that the price of flour used to produce bagels increases. Hence the equilibrium price
of a bagel ________ and the equilibrium quantity ________.
A) rises; increases
B) rises; decreases
C) falls; increases
D) falls; decreases
E) does not change; does not change
52) Fresh orange juice and frozen orange juice are substitutes in production. The price of fresh
orange juice rises. As a result, the equilibrium price of frozen orange juice ________ and the
equilibrium quantity ________.
A) rises; increases
B) rises; decreases
C) falls; increases
D) falls; decreases
E) does not change; decreases
53) A construction boom occurs and many of the new buildings need plywood for their framing.
Which of the figures above best illustrates this change?
A) Figure A
B) Figure B
C) Figure C
D) Figure D
E) Figure A or Figure C