286 Miller Economics Today, 16th Edition
34) When there is a shortage,
I. there is a tendency for price to increase.
II. there is an excess quantity demanded.
A) I only B) II only C) Both I and II D) Neither I nor II
35) When a shortage exists,
A) the price is below the market clearing price.
B) quantity demanded exceeds quantity supplied.
C) an excess quantity demanded exists.
D) all of the above
36) Suppose that the price of wheat is above its equilibrium price. You would expect to see
A) a shortage on the market that causes prices to increase further.
B) an increase in quantity demanded because of the high price.
C) a leftward shift of the demand curve because of the high price.
D) sellers begin to lower their prices because of the surplus of wheat.
37) Which of the following is true of the activities of ticket scalpers?
A) These activities cannot generate profits for the scalpers unless ticket prices are currently
below market clearing levels.
B) These activities help reduce the quantities of excess tickets supplied for events in which
ticket surpluses currently exist.
C) Engaging in these activities enable scalpers to push the price above the market clearing
level.
D) Engaging in these activities enable scalpers to push the price below the market clearing
level.
38) When there is an excess quantity of a product supplied, there will be
A) a tendency for price of the product to increase.
B) a tendency for price of the product to fall.
C) incentives for consumers to leave the market.
D) upward pressure on the price of labor.
39) An excess quantity supplied can be corrected by
A) a fall in price.
B) legally fixing the price at its present level.
C) a decrease in demand.
D) an increase in supply.
40) Equilibrium in a market occurs when
A) demand and supply indicate a small surplus of a good.
B) price is at its minimum.
C) quantity supplied and quantity demanded are equal at the market clearing price.
D) the market price leads to a decrease in quantity demanded.
41) Another term for the equilibrium price is
A) excess demand. B) nominal price.
C) law of demand. D) market clearing price.
42) Market clearing price
A) refers to a movement along the demand curve.
B) refers to a supply curve.
C) exists at a the point at which quantity demanded equals quantity supplied.
D) refers to a surplus.
43) Which of the following is NOT true about the equilibrium price?
A) The price where a change in quantity supplied occurs.
B) The price where the demand curve intersects the supply curve.
C) The price where quantity demanded equals quantity supplied.
D) The price where there is neither excess quantity demanded or excess quantity supplied.
44) The market clearing price is
A) the price which eliminates excess quantity supplied or excess quantity demanded.
B) the price which leaves an excess quantity demanded.
C) the price which leaves an excess quantity supplied.
D) the lowest price at which a positive quantity supplied exists.
45) When there is an excess quantity supplied,
A) the market is in equilibrium.
B) quantity demanded is greater than quantity supplied.
C) quantity demanded is less than quantity supplied.
D) prices will remain stable.
46) If the price of an item can freely adjust, a market will
A) always move towards equilibrium.
B) always have an excess quantity demanded.
C) always have an excess quantity supplied.
D) never move towards equilibrium because prices are always increasing.
47) A surplus exists
A) in equilibrium.
B) when quantity supplied is greater than quantity demanded.
C) when quantity supplied is less that quantity demanded.
D) at the market clearing price.
48) A shortage exists
A) in equilibrium.
B) when quantity supplied is greater than quantity demanded.
C) when quantity supplied is less than quantity demanded.
D) at the market clearing price.
49) Another name for a shortage is
A) excess quantity supplied. B) excess quantity demanded.
C) equilibrium. D) market clearing.
50) Another name for a surplus is
A) excess quantity supplied. B) excess quantity demanded.
C) equilibrium. D) market clearing.
290 Miller Economics Today, 16th Edition
Price Quantity Demanded Quantity Supplied
Per TV Per Month Per Month
$800 2,000 12,000
750 3,000 11,000
700 4,000 10,000
650 5,000 9,000
600 6,000 8,000
550 7,000 7,000
500 8,000 6,000
450 10,000 4,000
51) Refer to the above table. The equilibrium price of TVs is
A) $500. B) $550. C) $650. D) $700.
52) Refer to the above table. At a price of $450, there is an
A) equilibrium.
B) excess quantity supplied of 4,000 TVs.
C) excess quantity demanded of 6,000 TVs.
D) excess quantity demanded of 9,000 TVs.
53) Refer to the above table. There is an excess quantity supplied of 2,000 units at a price of
A) $450. B) $500. C) $600. D) $700.
54) Refer to the above figure. The equilibrium price and quantity are
A) $2 and 12 units. B) $6 and 9 units.
C) $8 and 6 units. D) $10 and 1 unit.
55) Refer to the above figure. The market clearing price is
A) $2. B) $6. C) $8. D) $10.
56) Refer to the above figure. A surplus will exist when
A) the price is between $0 and $6. B) the price equals $6.
C) the price equals $10. D) quantity demanded equals 15.
57) Refer to the above figure. A shortage will exist when
A) the price is between $0 and $6. B) the price equals $6.
C) the price equals $10. D) quantity demanded equals 3.
58) Refer to the above figure. Excess quantity supplied will exist when
A) the price is between $0 and $6. B) the price equals $6.
C) the price equals $10. D) quantity demanded equals 15.
59) Refer to the above figure. Excess quantity demanded will exist when
A) the price is between $0 and $6. B) the price equals $6.
C) the price equals $10. D) quantity demanded equals 3.
60) Refer to the above figure. At a price of $10, excess quantity supplied equals
A) 0. B) 12. C) 15. D) infinity.
61) Refer to the above figure. At a price of $6, excess quantity supplied equals
A) 0. B) 12. C) 15. D) infinity.
62) Refer to the above figure. At a price of $2, excess quantity demanded equals
A) 0. B) 3. C) 12. D) 15.
63) Refer to the above figure. At a price of two cents, the quantity of bubble gum demanded will be
A) 3. B) 2. C) 4. D) 5.
64) Refer to the above figure. At a price of four cents, the quantity of bubble gum supplied will be
A) 3. B) 2. C) 4. D) 5.
65) Refer to the above figure. At a price of four cents, a(n) ________ of bubble gum will exist in the
market.
A) surplus B) shortage
C) excess quantity demanded D) equilibrium quantity
66) Refer to the above figure. At a price of three cents, a(n) ________ of bubble gum will exist in the
market.
A) surplus B) shortage
C) equilibrium quantity D) excess quantity supplied
67) In the above figure, what are the equilibrium price and quantity?
A) $40 and 200 units B) $50 and 100 units
C) $10 and 200 units D) $30 and 100 units
68) In the above figure, what would result if the price was $40?
A) a surplus B) a shortage C) equilibrium D) excess demand
69) In the above figure, if the price is equal to $50, there is
A) a surplus of 200 units.
B) a shortage of 100 units.
C) an excess quantity demanded of 50 units.
D) an inadequate supply of 100 units.
70) If there is a surplus,
A) fewer producers want to sell the product because it is too scarce.
B) consumers will drive up the price further.
C) firms will drive up the price to enhance profits.
D) the price will decline to the equilibrium level.
71) Which of the following statements is correct?
A) A shortage and scarcity are the same thing.
B) A shortage occurs when the quantity demanded is less than the quantity supplied at a
price below the market clearing price.
C) A shortage occurs when the quantity demanded is greater than the quantity supplied at a
price below the market clearing price.
D) A shortage occurs when the quantity demanded is less than the quantity supplied at a
price above the market clearing price.
Quantity Quantity
Price Demanded Supplied
$50 300 0
$55 220 80
$60 150 150
$65 90 230
$70 30 300
72) Using the above table, at a price of $70, there is
A) a surplus of 150 units. B) a shortage of 120 units.
C) a surplus of 270 units. D) a shortage of 150 units.
73) Using the above table, the market clearing price is ________ and equilibrium quantity is
________.
A) $55; 80 B) $60; 150 C) $70; 150 D) $150; 150
296 Miller Economics Today, 16th Edition
Quantity Quantity
Price Demanded Supplied
$5 5 25
$4 10 20
$3 15 15
$2 20 10
$1 25 5
74) Using the above table, at a price of $5 there will be a
A) shortage of 20 units. B) shortage of 10 units.
C) surplus of 20 units. D) surplus of 10 units.
75) Using the above table, the market clearing price for this product is
A) $5. B) $4. C) $3. D) $2.
76) What happens as the result of a shortage?
A) There is downward pressure on prices.
B) There is upward pressure on prices.
C) Consumers begin to view the good as an inferior good because they have a hard time
finding it.
D) Supply of the good decreases.
77) What happens as the result of a surplus?
A) There is downward pressure on prices.
B) There is upward pressure on prices.
C) Consumers begin to view the good as an inferior good because it is too commonplace.
D) Demand for the good increases.
78) Suppose that, at a rental rate of $1000 per month, 650 residents wish to rent apartments and that
landlords offer 800 apartments available for rent. Which one of the following statements is then
true?
A) There is a shortage of 150 apartments.
B) There is an excess demand for apartments.
C) The market clearing rental price of apartments is too low.
D) The market clearing rental price of apartments is less than $1000 per month.
79) Suppose that, at an official ticket price of $480, there are 6,000 Justin Timberlake fans wanting to
attend his concert, but only 4,000 ticketed seats are available. Which one of the following
statements is then true?
A) There will be scalpers outside the arena selling tickets for $480.
B) There will be a surplus of tickets.
C) The market clearing price of the tickets is less than $480.
D) The market clearing price of the tickets is more than $480.
80) Which of the following situations could generate a shortage?
A) Demand for a good increases, resulting in a new higher market clearing price.
B) Demand for a good decreases, resulting in a new lower market clearing price.
C) Demand for a good increases, but the price is not permitted to rise.
D) Demand for a good decreases, but the price is not permitted to fall.
81) The market clearing price of a good is
A) the price at which there is at least some of the good available for everyone.
B) the price at which there is no surplus and no shortage.
C) the price that consumers prefer.
D) the price that producers prefer.
82) What situation gives rise to a surplus?
A) The market clearing price of the good is too high.
B) The current price of the good is below its market clearing price.
C) The current price of the good is above its market clearing price.
D) Supply of the good decreases, but the market price is not permitted to change.
83) When the current price of an item is greater than the item s market clearing price,
A) supply is greater than demand.
B) demand is greater than supply.
C) quantity supplied is greater than quantity demanded.
D) quantity supplied is less than quantity demanded.
84) When a shortage exists in a market,
A) the market clearing price is above equilibrium and market forces will cause the price to
fall.
B) the quantity demanded is less than the quantity supplied at the existing price.
C) the current price is below the market clearing price and the price will rise.
D) the quantity supplied is greater than the quantity demanded at the current price.
85) If the price of a product increases,
A) there is an increase in quantity supplied and a decrease in demand.
B) there is an increase in supply and a decrease in quantity demanded.
C) there is an increase in supply and a decrease in demand.
D) there is an increase in quantity supplied and a decrease in quantity demanded.
86) Which of the following occurs when a market is in equilibrium?
A) quantity supplied is equal to quantity demanded
B) supply is equal to demand.
C) the price of the good will tend to rise, all else held constant.
D) the price of the good will tend to fall, all else held constant.
87) When there is an excess quantity supplied in the market,
A) the price of the product will increase, causing a decrease in demand and an increase in
supply.
B) the price of the product will increase, causing a decrease in quantity demanded and an
increase in supply.
C) the price of the product will decrease, causing an increase in quantity demanded and a
decrease in quantity supplied.
D) the price will increase, causing a decrease in demand and an increase in quantity supplied.
88) If a scalper for the Super Bowl is able to charge $10,000 for a front row seat, this suggests that
A) at the regular price, there is a surplus of Super Bowl tickets.
B) at the regular price, there is a shortage of Super Bowl tickets.
C) at the regular price, the quantity of Super Bowl tickets demanded equals the quantity
supplied.
D) the scalper is making the football fan worse off.
89) At the market clearing price,
A) there is neither a shortage nor a surplus.
B) quantity supplied equals quantity demanded.
C) the supply and demand curves intersect.
D) All of the above are correct.
90) Suppose a shortage for good X exists. Given this information, we know that
A) the price of good X will tend to rise toward the equilibrium level.
B) the price of good X will tend to fall toward the equilibrium level.
C) a government price floor should be imposed above the current price so that the market can
work more effectively.
D) a government price ceiling should be imposed above the current price so that the market
can work more effectively.
91) A shortage creates a situation that forces prices to ________ while a surplus creates a situation
that forces prices to ________.
A) decrease; increase B) decrease; decrease
C) increase; decrease D) increase; increase
92) The demand for orthodontists services falls as the proportion of the population that obtains
braces falls. It may take several years before the new long run equilibrium for the orthodontic
labor market is attained. In the meantime, the orthodontic labor market experiences a
A) shortage. B) quality decrease.
C) surplus. D) excess demand.
93) A shortage is the same thing as scarcity. Do you agree or disagree with this statement? Why?
What can cause a shortage to disappear in a market? What can cause scarcity to disappear?
94) Given a market equilibrium point, explain, using the concepts of demand and supply, how it is
achieved.
95) How is the equilibrium price determined? What happens if the price is above the equilibrium
price? What happens if the price is below the equilibrium price?