The Market Forces of Supply and Demand 935
6. Buyers are able to buy all they want to buy and sellers are able to sell all they want to sell at
a. prices at and above the equilibrium price.
b. prices at and below the equilibrium price.
c. prices above and below the equilibrium price, but not at the equilibrium price.
d. the equilibrium price but not above or below the equilibrium price.
7. In markets, prices move toward equilibrium because of
a. the actions of buyers and sellers.
b. government regulations placed on market participants.
c. increased competition among sellers.
d. buyers‘ ability to affect market outcomes.
936 The Market Forces of Supply and Demand
8. Which of the following events must cause equilibrium quantity to fall?
a. demand increases and supply decreases
b. demand and supply both decrease
c. demand decreases and supply increases
d. demand and supply both increase
9. Which of the following events must cause equilibrium quantity to rise?
a. demand increases and supply decreases
b. demand and supply both decrease
c. demand decreases and supply increases
d. demand and supply both increase
The Market Forces of Supply and Demand 937
10. Which of the following events must cause equilibrium price to fall?
a. demand increases and supply decreases
b. demand and supply both decrease
c. demand decreases and supply increases
d. demand and supply both increase
11. Equilibrium quantity must decrease when demand
a. increases and supply does not change, when demand does not change and supply decreases,
and when both demand and supply decrease.
b. increases and supply does not change, when demand does not change and supply increases, and
when both demand and supply decrease.
c. decreases and supply does not change, when demand does not change and supply increases,
and when both demand and supply decrease.
d. decreases and supply does not change, when demand does not change and supply decreases,
and when both demand and supply decrease.
938 The Market Forces of Supply and Demand
12. Equilibrium quantity must increase when demand
a. increases and supply does not change, when demand does not change and supply increases, and
when both demand and supply increase.
b. increases and supply does not change, when demand does not change and supply increases, and
when both demand and supply decrease.
c. decreases and supply does not change, when demand does not change and supply decreases,
and when both demand and supply increase.
d. decreases and supply does not change, when demand does not change and supply decreases,
and when both demand and supply decrease.
13. Equilibrium price must decrease when demand
a. increases and supply does not change, when demand does not change and supply decreases,
and when demand decreases and supply increases simultaneously.
b. increases and supply does not change, when demand does not change and supply decreases,
and when demand increases and supply decreases simultaneously.
c. decreases and supply does not change, when demand does not change and supply increases,
and when demand decreases and supply increases simultaneously.
d. decreases and supply does not change, when demand does not change and supply increases,
and when demand increases and supply decreases simultaneously.
The Market Forces of Supply and Demand 939
14. Equilibrium price must increase when demand
a. increases and supply does not change, when demand does not change and supply decreases,
and when demand decreases and supply increases simultaneously.
b. increases and supply does not change, when demand does not change and supply decreases,
and when demand increases and supply decreases simultaneously.
c. decreases and supply does not change, when demand does not change and supply increases,
and when demand decreases and supply increases simultaneously.
d. decreases and supply does not change, when demand does not change and supply increases,
and when demand increases and supply decreases simultaneously.
15. Which of the following events must cause equilibrium price to rise?
a. demand increases and supply decreases
b. demand and supply both decrease
c. demand decreases and supply increases
d. demand and supply both increase
940 The Market Forces of Supply and Demand
16. If the demand for a product increases, then we would expect equilibrium price
a. to increase and equilibrium quantity to decrease.
b. to decrease and equilibrium quantity to increase.
c. and equilibrium quantity both to increase.
d. and equilibrium quantity both to decrease.
17. If the demand for a product decreases, then we would expect equilibrium price
a. to increase and equilibrium quantity to decrease.
b. to decrease and equilibrium quantity to increase.
c. and equilibrium quantity to both increase.
d. and equilibrium quantity to both decrease.
The Market Forces of Supply and Demand 941
18. If the supply of a product increases, then we would expect equilibrium price
a. to increase and equilibrium quantity to decrease.
b. to decrease and equilibrium quantity to increase.
c. and equilibrium quantity to both increase.
d. and equilibrium quantity to both decrease.
19. If the supply of a product decreases, then we would expect equilibrium price
a. to increase and equilibrium quantity to decrease.
b. to decrease and equilibrium quantity to increase.
c. and equilibrium quantity to both increase.
d. and equilibrium quantity to both decrease.
942 The Market Forces of Supply and Demand
20. When supply and demand both increase, equilibrium
a. price will increase.
b. price will decrease.
c. quantity may increase, decrease, or remain unchanged.
d. price may increase, decrease, or remain unchanged.
21. Suppose that demand for a good increases and, at the same time, supply of the good decreases.
What would happen in the market for the good?
a. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous.
b. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous.
c. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.
d. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.
The Market Forces of Supply and Demand 943
22. Suppose that demand for a good decreases and, at the same time, supply of the good decreases.
What would happen in the market for the good?
a. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous.
b. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous.
c. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.
d. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.
Table 4-9
An Increase in Supply
A Decrease in Supply
An Increase in Demand
A
B
A Decrease in Demand
C
D
23. Refer to Table 4-9. Which combination would produce an increase in equilibrium quantity and
an indeterminate change in equilibrium price?
a. A
b. B
c. C
d. D
944 The Market Forces of Supply and Demand
24. Refer to Table 4-9. Which combination would produce an increase in equilibrium price and
an indeterminate change in equilibrium quantity?
a. A
b. B
c. C
d. D
25. Refer to Table 4-9. Which combination would produce a decrease in equilibrium price and an
indeterminate change in equilibrium quantity?
a. A
b. B
c. C
d. D
The Market Forces of Supply and Demand 945
26. Refer to Table 4-9. Which combination would produce a decrease in equilibrium quantity and
an indeterminate change in equilibrium price?
a. A
b. B
c. C
d. D
Table 4-10
The following table shows the number of cases of water each seller is willing to sell at the prices
listed.
Price per case
Alpine Springs
Brook Mountain
Cascade Waters
Dew Good
$0.00
0 cases
0 cases
0 cases
0 cases
$3.00
100 cases
40 cases
60 cases
100 cases
$6.00
200 cases
80 cases
120 cases
200 cases
$9.00
300 cases
120 cases
180 cases
300 cases
27. Refer to Table 4-10. If Alpine Springs and Dew Good are the only two suppliers in this market,
by how much does the market quantity supplied change with each $3 increase in price?
a. –200 cases
b. -100 cases
c. 100 cases
d. 200 cases
946 The Market Forces of Supply and Demand
28. Refer to Table 4–10. If the four suppliers listed are the only suppliers in this market and the
market demand schedule is:
Price
Quantity Demanded
$0.00
1200
$3.00
900
$6.00
600
$9.00
300
the equilibrium price and quantity are
a. $0.00 and 1200 cases
b. $3.00 and 300 cases
c. $6.00 and 600 cases
d. $9.00 and 600 cases
29. Refer to Table 4–10. If the four suppliers listed are the only suppliers in this market and the
market quantity demanded is 500 cases when the price is $5.00, which of the following
statements is correct?
a. The market is in equilibrium at a price of $5.00.
b. There is a surplus of 100 cases at a price of $5.00.
c. There is a shortage of 100 cases at a price of $5.00.
d. There is a shortage of 50 cases at a price of $5.00.
The Market Forces of Supply and Demand 947
30. The law of supply and demand asserts that
a. demand curves and supply curves tend to shift to the right as time goes by.
b. the price of a good will eventually rise in response to an excess demand for that good.
c. when the supply curve for a good shifts, the demand curve for that good shifts in response.
d. the equilibrium price of a good will be rising more often than it will be falling.
31. Which of the following would cause price to decrease?
a. a decrease in supply
b. an increase in demand
c. a surplus of the good
d. a shortage of the good
948 The Market Forces of Supply and Demand
32. When the price of a good is higher than the equilibrium price,
a. a shortage will exist.
b. buyers desire to purchase more than is produced.
c. sellers desire to produce and sell more than buyers wish to purchase.
d. quantity demanded exceeds quantity supplied.
33. A surplus exists in a market if
a. there is an excess demand for the good.
b. quantity demanded exceeds quantity supplied.
c. the current price is above its equilibrium price.
d. All of the above are correct.
The Market Forces of Supply and Demand 949
34. If a surplus exists in a market, then we know that the actual price is
a. above the equilibrium price, and quantity supplied is greater than quantity demanded.
b. above the equilibrium price, and quantity demanded is greater than quantity supplied.
c. below the equilibrium price, and quantity demanded is greater than quantity supplied.
d. below the equilibrium price, and quantity supplied is greater than quantity demanded.
35. If, at the current price, there is a surplus of a good, then
a. sellers are producing more than buyers wish to buy.
b. the market must be in equilibrium.
c. the price is below the equilibrium price.
d. quantity demanded equals quantity supplied.
950 The Market Forces of Supply and Demand
36. When a surplus exists in a market, sellers
a. raise price, which increases quantity demanded and decreases quantity supplied, until the
surplus is eliminated.
b. raise price, which decreases quantity demanded and increases quantity supplied, until the
surplus is eliminated.
c. lower price, which increases quantity demanded and decreases quantity supplied, until the
surplus is eliminated.
d. lower price, which decreases quantity demanded and increases quantity supplied, until the
surplus is eliminated.
37. Suppose roses are currently selling for $40 per dozen, but the equilibrium price of roses is $30 per
dozen. We would expect a
a. shortage to exist and the market price of roses to increase.
b. shortage to exist and the market price of roses to decrease.
c. surplus to exist and the market price of roses to increase.
d. surplus to exist and the market price of roses to decrease.
The Market Forces of Supply and Demand 951
38. Suppose chocolate-dipped strawberries are currently selling for $30 per dozen, but the equilibrium
price of chocolate-dipped strawberries is $20 per dozen. We would expect a
a. shortage to exist and the market price of chocolate-dipped strawberries to increase.
b. shortage to exist and the market price of chocolate-dipped strawberries to decrease.
c. surplus to exist and the market price of chocolate-dipped strawberries to increase.
d. surplus to exist and the market price of chocolate-dipped strawberries to decrease.
39. The current price of blue jeans is $30 per pair, but the equilibrium price of blue jeans is $25 per
pair. As a result,
a. the quantity supplied of blue jeans exceeds the quantity demanded of blue jeans at the $30
price.
b. the equilibrium quantity of blue jeans exceeds the quantity demanded at the $30 price.
c. there is a surplus of blue jeans at the $30 price.
d. All of the above are correct.
952 The Market Forces of Supply and Demand
40. A university‘s football stadium is never more than half–full during football games. This indicates
a. the ticket price is above the equilibrium price.
b. the ticket price is below the equilibrium price.
c. the ticket price is at the equilibrium price.
d. nothing about the equilibrium price.
41. A university‘s football stadium is always sold out, and students who wait in line for hours may be
turned away. This indicates
a. the ticket price is above the equilibrium price.
b. the ticket price is below the equilibrium price.
c. the ticket price is at the equilibrium price.
d. nothing about the equilibrium price.
The Market Forces of Supply and Demand 953
42. When the price of a good is lower than the equilibrium price,
a. a surplus will exist.
b. buyers desire to purchase more than is produced.
c. sellers desire to produce and sell more than buyers wish to purchase.
d. quantity supplied exceeds quantity demanded.
43. A shortage exists in a market if
a. there is an excess supply of the good.
b. quantity supplied exceeds quantity demanded.
c. the current price is below its equilibrium price.
d. All of the above are correct.
954 The Market Forces of Supply and Demand
44. If a shortage exists in a market, then we know that the actual price is
a. above the equilibrium price, and quantity supplied is greater than quantity demanded.
b. above the equilibrium price, and quantity demanded is greater than quantity supplied.
c. below the equilibrium price, and quantity demanded is greater than quantity supplied.
d. below the equilibrium price, and quantity supplied is greater than quantity demanded.
45. If, at the current price, there is a shortage of a good, then
a. sellers are producing more than buyers wish to buy.
b. the market must be in equilibrium.
c. the price is below the equilibrium price.
d. quantity demanded equals quantity supplied.