Chapter 03 – Demand, Supply, and Market Equilibrium (+ Appendix)
149. Which is most likely to be observed in a community where legal ceilings are imposed on
residential rents?
Answer the next question(s) based on the following supply and demand schedules in units per
week for a product.
150. Refer to the above table. If the government introduced a guaranteed price floor of $40
and agreed to purchase surplus output, then the government’s total support payments to
producers would be:
Chapter 03 – Demand, Supply, and Market Equilibrium (+ Appendix)
151. Refer to the above table. If demand increased by 100 units at each price level, and the
government set a price ceiling of $40, then there will be:
152. Which would be an example of a government price ceiling?
153. A black market could arise as a result of:
Chapter 03 – Demand, Supply, and Market Equilibrium (+ Appendix)
154. A government will create a surplus of a product when it:
155. The graph above represents a competitive market for a product where the government
has set a price ceiling of OA. What quantity will buyers be able to buy after the imposition of
the price ceiling?
Chapter 03 – Demand, Supply, and Market Equilibrium (+ Appendix)
156. The graph above represents a competitive market for a product where the government
now has introduced a price floor of 0C. Which area in the graph represents the producers’
sales revenue after the imposition of the price floor?
157. Which of the following is a correct statement?
158. Last year the price of corn was $3 a bushel and the quantity of corn demanded was 10
million bushels. This year the price of corn was $4.00 a bushel and the quantity demanded
was 9 million bushels. Is this evidence that the law of demand does not apply to corn?
Chapter 03 – Demand, Supply, and Market Equilibrium (+ Appendix)
159. Why is there a shortage of human organs available for transplant?
160. If a competitive market developed for human organs, then the price for organs would:
161. Creating a competitive and legal market for human organs for transplant would make
the:
Chapter 03 – Demand, Supply, and Market Equilibrium (+ Appendix)
162. One objection to a competitive and legal market for human organs for transplant is that it
would:
163. The law of demand states that if price increases, other things being equal, the demand for
the product will decrease.
164. The Law of Demand states that the demand for a product will increase if buyers’ incomes
rise.
Chapter 03 – Demand, Supply, and Market Equilibrium (+ Appendix)
165. If two goods are substitutes, a decline in the price of one will cause a decrease in the
demand for the other.
166. When a fruit or vegetable (such as strawberries or lentils) are in season, the demand for
them increase as they become cheaper.
167. An increase in consumer incomes will cause a decrease in the demand for an inferior
good.
168. If two goods are complements, a decline in the price of one will cause an increase in the
demand for the other.
Chapter 03 – Demand, Supply, and Market Equilibrium (+ Appendix)
169. The law of supply states that, ceteris paribus, if the price of a good rises then the
quantity supplied of the good will decrease.
170. A decrease in the prices of computer chips for PCs will increase the supply of PCs.
171. The development of a new production technique that lowers the cost of producing
product X will shift the supply curve of product X to the right.
172. A surplus indicates that the quantity demanded is greater than the quantity supplied at
that price.
Chapter 03 – Demand, Supply, and Market Equilibrium (+ Appendix)
173. If the newspapers report that there is a shortage of strawberries, it must mean that the
current price of strawberries is below the equilibrium price.
174. If there is a surplus in a market, competition among the sellers will drive price down.
175. An increase in the supply of product X, with demand staying constant, will increase the
price of product X.
176. When the government requires ethanol from corn to be used as an additive to gasoline,
the supply of corn decreases.
Chapter 03 – Demand, Supply, and Market Equilibrium (+ Appendix)
177. When the government subsidizes the carmakers in the production of cars, the supply of
steel increases.
178. If the supply of a product decreases and demand increases, the equilibrium price and
quantity will both definitely increase.
179. An increase in both supply and demand will lead to an increase in the equilibrium price
and an indeterminate change in the equilibrium quantity.
180. A decrease in the supply of lettuce decreases its equilibrium price and increases its
equilibrium quantity.
Chapter 03 – Demand, Supply, and Market Equilibrium (+ Appendix)
181. A decrease in the price of digital cameras will cause the demand for memory cards to
shift to the left.
182. If the demand for personal computers increases, then supply will increase as price rises.
183. If the increase in supply is less than the decrease in demand, then the equilibrium price
will increase.
184. A price fixed above the equilibrium price of a product will cause a shortage of that
product.