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.
b.
c.
d.
4. Another term for equilibrium price is
a.
dynamic price.
b.
market-clearing price.
c.
quantity-defining price.
d.
balance price.
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
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.
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.
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 4-9
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
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
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
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.
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
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.
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.
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.
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.
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.
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.
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.
46. 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
47. 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.
48. 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.
49. 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.
50. 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.
Table 4-11
Price
Quantity
Demanded
Quantity
Supplied
$10
10
60
$8
20
45
$6
30
30
$4
40
15
$2
50
0
51. Refer to Table 4-11. 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.
52. Refer to Table 4-11. 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.
53. Refer to Table 4-11. 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.
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 Demanded
by Members
Quantity Demanded
by Non-members
Quantity Supplied
$10
1000
500
600
$15
800
400
600
$20
600
300
600
$25
400
200
600
$30
200
100
600
54. Refer to Table 4-12. 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
55. Refer to Table 4-12. 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
56. Refer to Table 4-12. 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.
57. Refer to Table 4-12. 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 4-13
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
58. Refer to Table 4-13. Regarding Harry and Darby, whose demand for sandwiches conforms to the law of demand?
a.
only Harry’s
b.
only Darby’s
c.
both Harry’s and Darby’s
d.
neither Harry’s nor Darby’s
59. Refer to Table 4-13. 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.
60. Refer to Table 4-13. 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.
61. Refer to Table 4-13. Suppose x = 1. Then the slope of the market demand curve is
a.
–3.
b.
-1/3.
c.
1/3.
d.
3.
62. Refer to Table 4-13. 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.