Chapter 4/The Market Forces of Supply and Demand ❖ 61
98. Refer to Figure 4-13. If the supply curves that are drawn represent supply curves for single–family residential
houses, then the movement from S to S’ could be caused by a(n)
a.
increase in the price of apartments which are a substitute for single–family houses for many people
looking for a place to live.
b.
newly-formed expectation by house-builders that prices of houses will increase significantly in the
next six months.
c.
decrease in the price of lumber.
d.
All of the above are correct.
SUPPLY AND DEMAND TOGETHER
1. The unique point at which the supply and demand curves intersect is called
a.
market harmony.
b.
coincidence.
c.
equivalence.
d.
equilibrium.
2. The dictionary defines equilibrium as a situation in which forces
a.
are in balance.
b.
are the same.
c.
clash.
d.
remain constant.
3. At the equilibrium price, the quantity of the good that buyers are willing and able to buy
a.
is greater than the quantity that sellers are willing and able to sell.
b.
exactly equals the quantity that sellers are willing and able to sell.
c.
is less than the quantity that sellers are willing and able to sell.
d.
Either a) or c) could be correct.
4. Another term for equilibrium price is
a.
dynamic price.
b.
market-clearing price.
c.
quantity-defining price.
d.
balance price.
62 ❖ Chapter 4/The Market Forces of Supply and Demand
5. In a given market, how are the equilibrium price and the market-clearing price related?
a.
There is no relationship.
b.
They are the same price.
c.
The market-clearing price exceeds the equilibrium price.
d.
The equilibrium price exceeds the market-clearing price.
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.
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
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
Chapter 4/The Market Forces of Supply and Demand ❖ 63
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.
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.
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.
64 ❖ Chapter 4/The Market Forces of Supply and Demand
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
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.
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.
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.
Chapter 4/The Market Forces of Supply and Demand ❖ 65
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.
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 4-6
An Increase in Supply
A Decrease in Supply
An Increase in Demand
A
B
A Decrease in Demand
C
D
23. Refer to Table 4-6. Which combination would produce an increase in equilibrium quantity and
an indeterminate change in equilibrium price?
a.
A
b.
B
c.
C
d.
D
24. Refer to Table 4-6. 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 4-6. Which combination would produce a decrease in equilibrium price and an indeterminate
change in equilibrium quantity?
a.
A
b.
B
c.
C
d.
D
66 ❖ Chapter 4/The Market Forces of Supply and Demand
26. Refer to Table 4-6. Which combination would produce a decrease in equilibrium quantity and an indetermi-
nate change in equilibrium price?
a.
A
b.
B
c.
C
d.
D
27. 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
28. 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.
29. 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.
30. 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.
31. 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.
Chapter 4/The Market Forces of Supply and Demand ❖ 67
32. 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.
33. 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.
34. The current price of neckties is $30, but the equilibrium price of neckties is $25. As a result,
a.
the quantity supplied of neckties exceeds the quantity demanded of neckties at the $30 price.
b.
the equilibrium quantity of neckties exceeds the quantity demanded at the $30 price.
c.
there is a surplus of neckties at the $30 price.
d.
All of the above are correct.
35. 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.
36. 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.
68 ❖ Chapter 4/The Market Forces of Supply and Demand
37. 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.
38. 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.
39. 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.
40. Which of the following would cause price to increase?
a.
an increase in supply
b.
a decrease in demand
c.
a surplus of the good
d.
a shortage of the good
41. When a shortage exists in a market, sellers
a.
raise price, which increases quantity demanded and decreases quantity supplied until the shortage is
eliminated.
b.
raise price, which decreases quantity demanded and increases quantity supplied until the shortage is
eliminated.
c.
lower price, which increases quantity demanded and decreases quantity supplied until the shortage
is eliminated.
d.
lower price, which decreases quantity demanded and increases quantity supplied until the shortage
is eliminated.
Chapter 4/The Market Forces of Supply and Demand ❖ 69
42. If there is a shortage of farm laborers, we would expect
a.
the wage of farm laborers to increase.
b.
the wage of farm laborers to decrease.
c.
the price of farm commodities to decrease.
d.
a decrease in the demand for substitutes for farm labor.
43. Suppose roses are currently selling for $20 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.
44. Years ago, thousands of country music fans risked their lives by rushing to buy tickets for a Willie Nelson
concert at Carnegie Hall. This behavior indicates
a.
the ticket price was above the equilibrium price.
b.
the ticket price was below the equilibrium price.
c.
the ticket price was at the equilibrium price.
d.
nothing about the equilibrium price.
45. 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.
Table 4-7
Price
Quantity
Demanded
Quantity
Supplied
$10
10
60
$8
20
45
$6
30
30
$4
40
15
$2
50
0
46. Refer to Table 4-7. The equilibrium price and quantity, respectively, are
a.
$2 and 50 units.
b.
$6 and 30 units.
c.
$6 and 60 units.
d.
$12 and 30 units.
70 ❖ Chapter 4/The Market Forces of Supply and Demand
47. Refer to Table 4-7. If the price were $8, a
a.
shortage of 20 units would exist, and price would tend to rise.
b.
surplus of 25 units would exist, and price would tend to fall.
c.
shortage of 25 units would exist, and price would tend to rise.
d.
surplus of 45 units would exist, and price would tend to fall.
48. Refer to Table 4-7. If the price were $4, a
a.
surplus of 15 units would exist, and price would tend to fall.
b.
shortage of 25 units would exist, and price would tend to rise.
c.
surplus of 25 units would exist, and price would tend to fall.
d.
shortage of 40 units would exist, and price would tend to rise.
Table 4-8
A country club usually only allows members to purchase tickets for its celebrity golf tournament, but the club
is considering allowing non-members to purchase tickets this year. The demand and supply schedules are as
follows:
Price
Quantity Supplied
$10
600
$15
600
$20
600
$25
600
$30
600
49. Refer to Table 4-8. If only members are allowed to purchase tickets to this year’s celebrity golf tournament,
then what will be the equilibrium price?
a.
$10
b.
$15
c.
$20
d.
$25
50. Refer to Table 4-8. If both members and non-members are allowed to purchase tickets to this year’s celebrity
golf tournament, then what will be the equilibrium price?
a.
$10
b.
$15
c.
$20
d.
$25
Chapter 4/The Market Forces of Supply and Demand ❖ 71
51. Refer to Table 4-8. If both members and non-members are allowed to purchase tickets to this year’s celebrity
golf tournament and the country club sets the ticket price at $30, then there will be
a.
a shortage of 300 tickets.
b.
a surplus of 300 tickets.
c.
600 tickets sold.
d.
600 tickets unsold.
52. Refer to Table 4-8. If both members and non-members are allowed to purchase tickets to this year’s celebrity
golf tournament and the country club sets the ticket price at $20, then there will be
a.
a shortage of 300 tickets.
b.
a surplus of 300 tickets.
c.
300 tickets sold.
d.
600 tickets unsold.
Table 4-9
The demand schedule below pertains to sandwiches demanded per week.
Price
Harry’s
Quantity
Demanded
Darby’s
Quantity
Demanded
Jake’s
Quantity
Demanded
$3
3
4
3
$5
1
2
x
53. Refer to Table 4-9. Regarding Harry and Darby, whose demand for sandwiches conforms to the law of de-
mand?
a.
only Harry’s
b.
only Darby’s
c.
both Harry’s and Darby’s
d.
neither Harry’s nor Darby’s
54. Refer to Table 4-9. Regarding Harry and Darby, for whom are sandwiches a normal good?
a.
only for Harry
b.
only for Darby
c.
for both Harry and Darby
d.
This cannot be determined from the given information.
72 ❖ Chapter 4/The Market Forces of Supply and Demand
55. Refer to Table 4-9. Suppose x = 1. Then it must be true that
a.
Harry and Jake have the same income, which is lower than Darby’s income.
b.
if sandwiches and potato chips are complements for Harry, then those two goods are also
complements for Jake.
c.
Harry’s demand curve is identical to Jake’s demand curve.
d.
All of the above are correct.
56. Refer to Table 4-9. Suppose x = 1. Then the slope of the market demand curve is
a.
–3.
b.
-1/3.
c.
1/3.
d.
3.
57. Refer to Table 4-9. Suppose Harry, Darby, and Jake are the only demanders of sandwiches. Also suppose x
= 2. Then
a.
the slope of Jake’s demand curve is -1/2, and the slope of the market demand curve is -5/2.
b.
the slope of Jake’s demand curve is -1/2, and the slope of the market demand curve is -2/5.
c.
the slope of Jake’s demand curve is -2, and the slope of the market demand curve is -5/2.
d.
the slope of Jake’s demand curve is -2, and the slope of the market demand curve is -2/5.
58. Refer to Table 4-9. Suppose Harry, Darby, and Jake are the only demanders of sandwiches and that the mar-
ket demand violates the law of demand. Then, in the table, the value of x must be
a.
less than or equal to 5.
b.
greater than or equal to 5.
c.
greater than or equal to 7.
d.
greater than or equal to 10.
59. Refer to Table 4-9. Suppose Harry, Darby, and Jake are the only demanders of sandwiches. Also suppose
the following:
• x = 2.
• The current price of a sandwich is $5.00.
• The market quantity supplied of sandwiches is 10.
• The law of supply applies to the supply of sandwiches.
Then there is a
a.
shortage of 5 sandwiches, and the price would be expected to rise from its current level of $5.00.
b.
shortage of 5 sandwiches, and the price would be expected to fall from its current level of $5.00.
c.
surplus of 5 sandwiches, and the price would be expected to rise from its current level of $5.00.
d.
surplus of 5 sandwiches, and the price would be expected to fall from its current level of $5.00.
Chapter 4/The Market Forces of Supply and Demand ❖ 73
60. Refer to Table 4-9. Suppose Harry, Darby, and Jake are the only demanders of sandwiches. Also suppose the
following:
• x = 2.
• The current price of a sandwich is $3.00.
• The market quantity supplied of sandwiches is 4.
• The slope of the supply curve is 2.
Then there is currently a
a.
shortage of 6 sandwiches, and the equilibrium price of a sandwich is less than $3.00.
b.
shortage of 6 sandwiches, and the equilibrium price of a sandwich is $5.00.
c.
surplus of 6 sandwiches, and the equilibrium price of a sandwich is less than $3.00.
d.
surplus of 6 sandwiches, and the equilibrium price of a sandwich is $5.00.
61. Refer to Table 4-9. Suppose Harry, Darby, and Jake are the only demanders of sandwiches. Also suppose
the following:
• x = 2.
• The current price of a sandwich is $3.00.
• The market quantity supplied of sandwiches is 5.
• The slope of the supply curve is 1.
Then there is currently a
a.
shortage of 5 sandwiches, and the equilibrium price of a sandwich is between $3.00 and $5.00.
b.
shortage of 5 sandwiches, and the equilibrium price of a sandwich is $5.00.
c.
surplus of 5 sandwiches, and the equilibrium price of a sandwich is between $3.00 and $5.00.
d.
surplus of 5 sandwiches, and the equilibrium price of a sandwich is $5.00.
Figure 4-14
D
S
1 2 3 4 5 6 7 8 9 10 Quantity
1
2
3
4
5
6
7
8
9
10
Price
62. Refer to Figure 4-14. At a price of
a.
$2, there is a surplus of 6 units.
b.
$5, there is a surplus of 25 units.
c.
$5, there is a shortage of $25.
d.
$7, there is a surplus of 4 units.
74 ❖ Chapter 4/The Market Forces of Supply and Demand
63. Refer to Figure 4-14. At a price of
a.
$2, there is a shortage of 6 units.
b.
$5, there is a surplus of 25 units.
c.
$5, there is a shortage of $25.
d.
$7, there is a shortage of 4 units.
64. Refer to Figure 4-14. At a price of
a.
$8, there is a surplus of 6 units.
b.
$5, there is neither a shortage nor a surplus.
c.
$2, there is a shortage of 6 units.
d.
All of the above are correct.
Figure 4-15
S
D
100 200 300 400 500 600 700 800 quantity
5
10
15
20
25
30
35
40
45
50 price
65. Refer to Figure 4-15. Equilibrium price and quantity are, respectively,
a.
$15 and 200 units.
b.
$25 and 600 units.
c.
$25 and 400 units.
d.
$35 and 200 units.
66. Refer to Figure 4-15. At the equilibrium price,
a.
200 units would be supplied and demanded.
b.
400 units would be supplied and demanded.
c.
600 units would be supplied and demanded.
d.
600 units would be supplied, but only 200 would be demanded.
Chapter 4/The Market Forces of Supply and Demand ❖ 75
67. Refer to Figure 4-15. At a price of $35, there would be a
a.
shortage of 400 units.
b.
surplus of 200 units.
c.
surplus of 400 units.
d.
surplus of 600 units.
68. Refer to Figure 4-15. At a price of $35, there would be
a.
a shortage, and the price would tend to rise from $35 to a higher price.
b.
a surplus, and the price would tend to rise from $35 to a higher price.
c.
excess demand, and the price would tend to fall from $35 to a lower price.
d.
excess supply, and the price would tend to fall from $35 to a lower price.
69. Refer to Figure 4-15. At what price would there be an excess supply of 200 units of the good?
a.
$15
b.
$20
c.
$30
d.
$35
70. Refer to Figure 4-15. At a price of $15, there would be a
a.
surplus of 400 units.
b.
shortage of 200 units.
c.
shortage of 400 units.
d.
shortage of 600 units.
71. Refer to Figure 4-15. At a price of $20, there would be a(n)
a.
shortage. The law of supply and demand predicts that the price will fall from $20 to a lower price.
b.
surplus. The law of supply and demand predicts that the price will rise from $20 to a higher price.
c.
excess demand. The law of supply and demand predicts that the price will rise from $20 to a higher
price.
d.
excess supply. The law of supply and demand predicts that the price will fall from $20 to a lower
price.
72. Refer to Figure 4-15. At what price would there be an excess demand of 200 units of the good?
a.
$15
b.
$20
c.
$30
d.
$35
76 ❖ Chapter 4/The Market Forces of Supply and Demand
Figure 4-16
S
D
10 20 30 40 50 60 70 80 90 quantity
2
4
6
8
10
12
14
16
18
20 price
73. Refer to Figure 4-16. In this market, equilibrium price and quantity, respectively, are
a.
$10 and 30 units.
b.
$10 and 50 units.
c.
$10 and 70 units.
d.
$4 and 50 units.
74. Refer to Figure 4-16. If price in this market is currently $14, then there would be a(n)
a.
surplus of 20 units. The law of supply and demand predicts that the price will rise from $14 to a
higher price.
b.
excess supply of 20 units. The law of supply and demand predicts that the price will fall from $14
to a lower price.
c.
surplus of 40 units. The law of supply and demand predicts that the price will rise from $14 to a
higher price.
d.
excess supply of 40 units. The law of supply and demand predicts that the price will fall from $14
to a lower price.
75. Refer to Figure 4-16. If there is currently a shortage of 20 units of the good, then the law of
a.
demand predicts that the price will rise by $2 to eliminate the shortage.
b.
supply predicts that the price will rise by $2 to eliminate the shortage.
c.
supply and demand predicts that the price will rise by $2 to eliminate the shortage.
d.
supply and demand predicts that the price will fall by $2 to eliminate the shortage.
Chapter 4/The Market Forces of Supply and Demand ❖ 77
Figure 4-17
S
D
100 200 300 400 500 600 700 800 900 quantity
5
10
15
20
25
30
35
40
45
50 price
76. Refer to Figure 4-17. In this market, equilibrium price and quantity, respectively, are
a.
$15 and 400 units.
b.
$20 and 600 units.
c.
$25 and 500 units.
d.
$25 and 800 units.
77. Refer to Figure 4-17. At a price of $20, which of the following statements is not correct?
a.
The market is in equilibrium.
b.
Equilibrium price is equal to equilibrium quantity.
c.
There is no pressure for price to change.
d.
The quantity of the good that is bought and sold is 600 units.
78. Refer to Figure 4-17. If price is $25, then quantity demanded and quantity supplied, respectively, are
a.
500 units and 500 units.
b.
500 units and 800 units.
c.
600 units and 600 units.
d.
800 units and 500 units.
79. Refer to Figure 4-17. If the price is $25, then there would be an excess
a.
supply of 100 units, and price would fall.
b.
supply of 300 units, and price would fall.
c.
demand of 100 units, and price would fall.
d.
demand of 300 units, and price would fall.
78 ❖ Chapter 4/The Market Forces of Supply and Demand
80. Refer to Figure 4-17. If the price is $10, then there would be a
a.
shortage of 400 units, and price would rise.
b.
surplus of 400 units, and price would rise.
c.
shortage of 600 units, and price would rise.
d.
surplus of 600 units, and price would rise.
81. Refer to Figure 4-17. At a price of $15,
a.
quantity demanded exceeds quantity supplied.
b.
there is a shortage.
c.
there is an excess demand.
d.
All of the above are correct.
Figure 4-18
D
S
1 2 3 4 5 6 7 8 9 10 quantity
2
4
6
8
10
12
14
16
18
20 price
82. Refer to Figure 4-18. What is the equilibrium price in this market?
a.
$0
b.
$5
c.
$7.50
d.
$10
83. Refer to Figure 4-18. What is the equilibrium quantity in this market?
a.
5 units
b.
7.5 units
c.
10 units
d.
The equilibrium quantity cannot be determined from this graph.
Chapter 4/The Market Forces of Supply and Demand ❖ 79
84. Refer to Figure 4-18. At a price of $12, there is a
a.
surplus of 1 unit.
b.
surplus of 2 units.
c.
shortage of 1 unit.
d.
shortage of 2 units.
85. Refer to Figure 4-18. At a price of $4, there is a
a.
surplus of 3 units.
b.
surplus of 6 units.
c.
shortage of 3 units.
d.
shortage of 6 units.
86. You have been asked by your economics professor to graph the market for lumber and then to analyze the
change that would occur in equilibrium price as a result of recent forest fires in the west. Your first step would
be to
a.
decide which direction to shift the curve.
b.
decide whether the fires affected demand or supply.
c.
graph the shift to see the effect on equilibrium.
d.
None of the above is correct.
87. Which of the following events must result in a higher price in the market for Snickers?
a.
Demand for Snickers increases, and supply of Snickers decreases.
b.
Demand for Snickers and supply of Snickers both decrease.
c.
Demand for Snickers decreases, and supply of Snickers increases.
d.
Demand for Snickers and supply of Snickers both increase
88. Suppose buyers of computers and printers regard the two goods as complements. Then an increase in the price
of computers will cause a(n)
a.
decrease in the demand for printers and a decrease in the quantity supplied of printers.
b.
decrease in the supply of printers and a decrease in the quantity demanded of printers.
c.
decrease in the equilibrium price of printers and an increase in the equilibrium quantity of printers.
d.
increase in the equilibrium price of printers and a decrease in the equilibrium quantity of printers.
80 ❖ Chapter 4/The Market Forces of Supply and Demand
89. Which of the following would increase in response to a decrease in the price of ironing boards?
a.
the quantity of irons demanded at each possible price of irons
b.
the equilibrium quantity of irons
c.
the equilibrium price of irons
d.
All of the above are correct.
90. A decrease in input costs to firms in a market will result in a(n)
a.
decrease in equilibrium price and an increase in equilibrium quantity.
b.
decrease in equilibrium price and a decrease in equilibrium quantity.
c.
increase in equilibrium price and a decrease in equilibrium quantity.
d.
increase in equilibrium price and an increase in equilibrium quantity.
91. Suppose there is an earthquake that destroys several corn canneries. Which of the following would not be a
direct result of this event?
a.
Sellers would not be able to produce and sell as much as before at each relevant price.
b.
The supply would decrease.
c.
Buyers would not be willing to buy as much as before at each relevant price.
d.
The equilibrium price would rise.
92. An early frost in the vineyards of Napa Valley would cause a(n)
a.
increase in the demand for wine, increasing price.
b.
increase in the supply of wine, decreasing price.
c.
decrease in the demand for wine, decreasing price.
d.
decrease in the supply of wine, increasing price.
93. Suppose the number of buyers in a market increases and a technological advancement occurs also. What
would we expect to happen in the market?
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.