Deck 5: Market Equilibrium

Question 1

What is the equilibrium point?

A) the point where the demand curve intersects the vertical axis
B) the point where the supply curve intersects the vertical axis
C) the point where the supply curve and demand curve intersect
D) the point where the price intersects the supply curve

Answer 1

C

Question 2

The _____ is where the supply curve and the demand curve intersect.

A) equilibrium point
B) vertical axis
C) horizontal axis
D) surplus

Answer 2

A

Question 3

What is the equilibrium price?

A) the price that minimizes a producer's profit
B) the price that brings the market to the equilibrium point
C) the lowest price that can be imposed on a market
D) the difference between revenue and costs

Answer 3

B

Question 4

The _____ brings the market to the equilibrium point.

A) price ceiling
B) price floor
C) equilibrium quantity
D) equilibrium price

Question 5

Use Table: Supply and Demand Schedule for Walking Tours. What is the equilibrium price and quantity in this market?
​

A) Price is $30, and quantity is 70.
B) Price is $10 and quantity is 30.
C) Price is $60 and quantity is 40.
D) Price is $40 and quantity is zero.

Question 6

When a market has reached the equilibrium quantity, the:

A) highest price that consumers are willing to pay is equal to the lowest price that sellers are willing to accept.
B) price received by consumers is higher than the price paid by sellers.
C) price paid by consumers is lower than the price received by sellers.
D) lowest price that consumers are willing to pay is equal to the highest price that sellers are willing to accept.

Question 7

In the widget market, currently 100 widgets are being sold. At this quantity, consumers are willing to pay $5, and sellers are willing to accept $2. What must be true in the widget market?

A) There is currently a surplus of widgets, and the price must rise above $5.
B) There is currently a surplus of widgets, and the price must fall below $2.
C) There is currently a shortage of widgets, and the price must rise above $2.
D) The market is in equilibrium.

Question 8

In the widget market, currently 100 widgets are being sold. At this quantity, consumers are willing to pay $3, and sellers are willing to accept $6. What must be true in the widget market?

A) There is currently a surplus of widgets, and the price must rise above $6.
B) There is currently a surplus of widgets, and the price must fall below $6.
C) There is currently a shortage of widgets, and the price must rise above $6.
D) The market is in equilibrium.

Question 9

In the widget market, currently 100 widgets are being sold. At this quantity, consumers are willing to pay $7, and sellers are willing to accept $7. What must be true in the widget market?

A) There is currently a surplus of widgets, and the price must rise above $7.
B) There is currently a surplus of widgets, and the price must fall below $7.
C) There is currently a shortage of widgets, and the price must rise above $7.
D) The market is in equilibrium.

Question 10

The equilibrium quantity is the quantity that:

A) exists when the price is higher than the equilibrium price.
B) exists when the price is lower than the equilibrium price.
C) exists when supply is greater than demand.
D) is both demanded and supplied at the equilibrium price.

Question 11

What statement about markets is correct?

A) We can expect markets to stay at a price that is higher than the equilibrium price.
B) We can expect markets to gravitate toward their equilibrium points.
C) We can expect persistent shortages in markets.
D) We can expect persistent surpluses in markets.

Question 12

The current price of a flower arrangement is $40. At the current price, more people want to buy flower arrangements than sellers are willing to sell at that price. What statement about the market for flower arrangements is correct?

A) The market for flower arrangements is in equilibrium.
B) The price of flower arrangements will decrease.
C) The price of flower arrangements will increase.
D) There is a surplus in this market.

Question 13

When the price in a market is below the equilibrium price, a _____ will exist in that market.

A) shortage
B) surplus
C) equilibrium
D) balance

Question 14

When the price in a market is above the equilibrium price, a _____ will exist in that market.

A) shortage
B) surplus
C) equilibrium
D) balance

Question 15

An auction is being held to sell one vintage automobile. Two hundred potential buyers arrive to place bids on the auto. At the start of the auction, a _____ exists, and there is pressure on the price to _____.

A) shortage; fall
B) surplus; fall
C) surplus; rise
D) shortage; rise

Question 16

A _____ occurs when the price of a good is higher than the equilibrium price, and a _____ occurs when the price of a good is lower than the equilibrium price.

A) equilibrium; shortage
B) shortage; surplus
C) surplus; shortage
D) surplus; equilibrium

Question 17

The current price of cupcakes is $4, but the equilibrium price in the market for cupcakes is $5. What will happen in this market?

A) There will be a shortage, but the price will gravitate up.
B) There will be a surplus, but the price will gravitate down.
C) There will be a shortage, but the price will gravitate down.
D) There will be a surplus, but the price will gravitate up.

Question 18

The equilibrium price is the price that:

A) makes buyers the happiest.
B) makes the quantity supplied equal to the quantity demanded.
C) generates the largest surplus in a market.
D) generates the smallest surplus in a market.

Question 19

A new gaming headset was released at a price of $75. The quantity of gaming headsets supplied is higher than the quantity of gaming headsets demanded at this price. What is true about the market for gaming headsets?

A) It is in equilibrium.
B) There is a shortage.
C) There is a surplus.
D) The price of gaming headsets will not change.

Question 20

A new gaming controller was released at a price of $65. The quantity of gaming controllers supplied is higher than the quantity of gaming controllers demanded at this price. What is true about the market for gaming headsets?

A) It is in equilibrium.
B) There is a shortage.
C) There is a surplus.
D) The price of gaming headsets will not change.

Question 21

What would sellers do if people wanted to buy more of their good than they are willing to sell at the current price?

A) produce more at the same price
B) produce less at a higher price
C) produce more at a higher price
D) produce less at a lower price

Question 22

What would sellers do if people wanted to buy less of their good than they are willing to sell at the current price?

A) produce more at the same price
B) produce less at a higher price
C) produce more at a higher price
D) produce less at a lower price

Question 23

Use Figure: The Market for Sandwiches. What is the equilibrium price and quantity in this market?
​
Figure: The Market for Sandwiches

A) The equilibrium price is $6, and the equilibrium quantity is eight.
B) The equilibrium price is $9, and the equilibrium quantity is 12.
C) The equilibrium price is $4, and the equilibrium quantity is 12.
D) The equilibrium price is $8, and the equilibrium quantity is six.

Question 24

Use Figure: The Market for Sandwiches. What happens if the current price of sandwiches is $6?
​
Figure: The Market for Sandwiches

A) There is a shortage.
B) There is a surplus.
C) Quantity supplied exceeds quantity demanded.
D) Quantity supplied equals quantity demanded.

Question 25

Use Figure: The Market for Sandwiches. What happens if the current price of sandwiches is $9?
​
Figure: The Market for Sandwiches

A) There is a shortage.
B) There is a surplus.
C) Quantity demanded exceeds quantity supplied.
D) Quantity supplied equals quantity demanded.

Question 26

Use Figure: The Market for Sandwiches. What happens if the current price of sandwiches is $4?
​
Figure: The Market for Sandwiches

A) There is a shortage.
B) There is a surplus.
C) Quantity supplied exceeds quantity demanded.
D) Quantity supplied equals quantity demanded.

Question 27

Use Figure: The Market for Sandwiches. What happens if the current price of sandwiches is $5?
​
Figure: The Market for Sandwiches

A) There is a shortage.
B) There is a surplus.
C) Quantity supplied exceeds quantity demanded.
D) Quantity supplied equals quantity demanded.

Question 28

A price ceiling:

A) is an artificial upper limit on the price of a good or service.
B) is the minimum price that a good can be sold for.
C) leads to surpluses.
D) is a price set on a market that is higher than the equilibrium price.

Question 29

_____ is an artificial upward limit on the price of a good or service.

A) A price floor
B) A price ceiling
C) A surplus
D) An equilibrium

Question 30

Use Table: Supply and Demand Schedule for Walking Tours. What price would NOT cause deadweight loss in this market?
​

A) $20
B) $30
C) $40
D) $50

Question 31

Use Table: Supply and Demand Schedule for Walking Tours. What price would be an effective price floor, and how much would be sold?
​

A) The price is $30, and the quantity is 70.
B) The price is $10, and the quantity is 30.
C) The price is $50, and the quantity is 50.
D) The price is $40, and the quantity is 0.

Question 32

Use Table: Supply and Demand Schedule for Walking Tours. What price would NOT be an effective price floor?
​

A) $20
B) $40
C) $50
D) $60

Question 33

The equilibrium price of crab claws is $19 per pound. What would be a price ceiling in the market for crab claws that would cause a shortage?

A) $18
B) $19
C) $20
D) $21

Question 34

Use Figure: The Market for Sandwiches. What happens if a price ceiling of $4 is placed on this market?
​
Figure: The Market for Sandwiches

A) The price ceiling would not affect this market.
B) There would be a shortage of six sandwiches.
C) There would be a surplus of five sandwiches.
D) A total of 11 sandwiches will be sold.

Question 35

Use Figure: The Market for Sandwiches. What happens if a price ceiling of $9 is placed on this market?
​
Figure: The Market for Sandwiches

A) The price ceiling would not affect this market.
B) There would be a shortage of five sandwiches.
C) There would be a surplus of five sandwiches.
D) A total of 11 sandwiches will be sold.

Question 36

There is deadweight loss in the market for cycling classes because the current price is less than the equilibrium price. However, the price is not adjusting upward. What caused this?

A) a price ceiling
B) a price floor
C) an increase in supply
D) a decrease in demand

Question 37

Use Figure: The Market for Sandwiches. What happens if a price ceiling of $6 is placed on this market?
​
Figure: The Market for Sandwiches

A) The price ceiling would not affect this market.
B) There would be a shortage of eight sandwiches.
C) There would be a surplus of eight sandwiches.
D) A total of 11 sandwiches will be sold.

Question 38

Use Table: Supply and Demand Schedule for Walking Tours. What would be an effective price ceiling in this market, and how much would be sold?

A) The price is $10, and 70 would be sold.
B) The price is $30, and 80 would be sold.
C) The price is $20, and 50 would be sold.
D) The price is $10, and 90 would be sold.

Question 39

Use Table: Supply and Demand Schedule for Walking Tours. What would NOT be an effective price ceiling in this market?
​

A) $10
B) $20
C) $25
D) $40

Question 40

A _____ market is an illegal market.

A) white
B) black
C) gray
D) yellow

Question 41

Black markets tend to emerge when there is:

A) a price floor.
B) a price ceiling.
C) a surplus.
D) an equilibrium.

Question 42

The government of Maxistan has imposed a price ceiling in the market for shoes and has been able to prevent black markets from forming. What is true about the market for shoes in Maxistan?

A) No shortages will exist.
B) The price will return to the equilibrium price.
C) Shoe buyers pay more in the form of queuing costs.
D) A price floor will be created.

Question 43

Which of the following is NOT a possible consequence of an effective price ceiling?

A) queueing costs
B) black markets
C) inferior quality
D) industrial expansion

Question 44

Use Figure: The Market for Green Chile Scones. A price ceiling has been placed on the market for green chile scones. Which area represents the deadweight loss that occurs as a result of the price ceiling?
​

A) A
B) B
C) C
D) D

Question 45

The equilibrium price in the market for lobster tails is $45 per pound. If a price of $30 is imposed on this market, this would be:

A) an equilibrium price.
B) an effective price ceiling.
C) an effective price floor.
D) a rationing coupon.

Question 46

_____ is an artificial lower bound on the price of a good or service.

A) A price ceiling
B) A price floor
C) An equilibrium point
D) A deadweight loss

Question 47

The equilibrium price in the market for lobster tails is $45 per pound. If a price of $50 is imposed on this market, this would be:

A) an equilibrium price.
B) an effective price ceiling.
C) an effective price floor.
D) a queueing cost.

Question 48

What happens if an effective price floor is placed on the market for steel?

A) There will be a shortage of steel.
B) The price of steel will be lower than the equilibrium price.
C) The quality of steel produced will decrease.
D) There will be a surplus of steel.

Question 49

Use Figure: The Market for Sandwiches. What price in this market would be an effective price floor?
​
Figure: The Market for Sandwiches

A) $4
B) $5
C) $6
D) $9

Question 50

Use Figure: The Market for Sandwiches. What happens if a price floor of $9 is placed on this market?
​
Figure: The Market for Sandwiches

A) The price floor would not affect this market.
B) There would be a shortage of five sandwiches.
C) There would be a surplus of nine sandwiches.
D) A total of five sandwiches will be sold.

Question 51

An effective price floor is set _____ the equilibrium price and causes a _____.

A) above; surplus
B) below; shortage
C) above; shortage
D) below; surplus

Question 52

What is deadweight loss?

A) the difference between quantity supplied and quantity demanded when there is a price ceiling
B) the difference between quantity supplied and quantity demanded when there is a price floor
C) the loss of consumer or producer surplus that is caused by an inefficient quantity of output
D) illegal markets that can occur as a consequence of shortages

Question 53

What is true about deadweight loss?

A) It occurs only if there is a shortage.
B) It occurs only if there is a surplus.
C) It occurs in equilibrium.
D) It occurs at any time that the quantity sold is not the equilibrium quantity.

Question 54

The consumer and producer surplus that is lost when an inefficient quantity is sold is called:

A) deadpan surplus.
B) deadweight loss.
C) shortages.
D) surpluses.

Question 55

The price in a market is currently higher than the equilibrium price, and as a result, there is deadweight loss in this market. What caused this?

A) a price ceiling
B) a price floor
C) an increase in supply
D) an increase in demand

Question 56

Use Figure: The Market for Sandwiches. How much is sold if a price floor of $9 is imposed on this market?
​
Figure: The Market for Sandwiches

A) two
B) six
C) eight
D) 12

Question 57

Use Figure: The Market for Sandwiches II. What does the shaded area in this graph represent?
​
Figure: The Market for Sandwiches II

A) consumer surplus
B) shortage
C) producer surplus
D) deadweight loss

Question 58

Use Figure: The Market for Sandwiches II. What does the shaded area in this graph represent?
​
Figure: The Market for Sandwiches II

A) consumer surplus
B) deadweight loss
C) surplus
D) producer surplus

Question 59

Use Figure: The Market for Aluminum. What area represents the deadweight loss created by the price floor in this market?
​
Figure: The Market for Aluminum

A) A
B) B
C) C
D) D

Question 60

An increase in demand causes what changes in a market?

A) Price increases, and quantity decreases.
B) Price decreases, and quantity increases.
C) Price increases, and quantity increases.
D) Price decreases, and quantity decreases.

Question 61

Why does an increase in demand cause an increase in a good's equilibrium price?

A) There is a surplus at the old price, which leads firms to charge a higher price.
B) There is a shortage at the old price, which leads to firms to charge a higher price.
C) An increase in demand causes a price ceiling to be placed on a market.
D) At the old price, the quantity demanded is less than the quantity supplied, which leads firms charge a higher price.

Question 62

Why does the equilibrium quantity change when there is an increase in demand?

A) A shortage leads to a decrease in price, and a lower price increases quantity supplied and decreases quantity demanded.
B) A surplus leads to a decrease in price, and a lower price increases quantity supplied and decreases quantity demanded.
C) A shortage leads to an increase in price, and a higher price increases quantity supplied and decreases quantity demanded.
D) A shortage leads to an increase in price, and a higher price decreases quantity supplied and decreases quantity demanded.

Question 63

How does the price and quantity change for a normal good if consumer income increases?

A) Price increases, and quantity increases.
B) Price increases, and quantity decreases.
C) Price decreases, and quantity increases.
D) Price decreases, and quantity decreases.

Question 64

How does the price and quantity change for crab claws if the price of butter, a complement in consumption to crab claws, decreases?

A) Price increases, and quantity decreases.
B) Price decreases, and quantity increases.
C) Price increases, and quantity increases.
D) Price decreases, and quantity decreases.

Question 65

How does the price and quantity change for a crab claws if the price of lobster tails, a substitute in consumption to crab claws, decreases?

A) Price increases, and quantity decreases.
B) Price decreases, and quantity increases.
C) Price decreases, and quantity decreases.
D) Price increases, and quantity increases.

Question 66

A decrease in demand causes what changes in a market?

A) Price increases, and quantity decreases.
B) Price decreases, and quantity increases.
C) Price increases, and quantity increases.
D) Price decreases, and quantity decreases.

Question 67

Why does a decrease in demand cause a decrease in a good's equilibrium price?

A) There is a surplus at the old price, which leads firms to charge a lower price.
B) There is a shortage at the old price, which leads firms to charge a lower price.
C) A decrease in demand causes a price floor to be placed on a market.
D) At the old price, the quantity demanded is greater than the quantity supplied, which leads firms to charge a lower price.

Question 68

Why does the equilibrium quantity change when there is a decrease in demand?

A) A shortage leads to a lower price, and a higher price increases quantity supplied and decreases quantity demanded.
B) A surplus leads to a lower price, and a lower price increases quantity supplied and decreases quantity demanded.
C) A shortage leads to a higher price, and a higher price increases quantity supplied and decreases quantity demanded.
D) A surplus leads to a lower price, and a lower price decreases quantity supplied and increases quantity demanded.

Question 69

How do the price and quantity change for an inferior good if income increases?

A) Price increases, and quantity increases.
B) Price increases, and quantity decreases.
C) Price decreases, and quantity increases.
D) Price decreases, and quantity decreases.

Question 70

How do the price and quantity change for lawn chairs if the price of outdoor grills, a complement in consumption to lawn chairs, increases?

A) Price increases, and quantity decreases.
B) Price decreases, and quantity increases.
C) Price increases, and quantity increases.
D) Price decreases, and quantity decreases.

Question 71

How do the price and quantity change for a lawn chairs if the price of outdoor sofas, a substitute in consumption to lawn chairs, increases?

A) Price increases, and quantity decreases.
B) Price decreases, and quantity increases.
C) Price decreases, and quantity decreases.
D) Price increases, and quantity increases.

Question 72

Which of the following causes a decrease in equilibrium price and quantity in the market for iced tea?

A) higher temperatures that increase people's preference for iced tea
B) an increase in the wages at beverage stands
C) an increase in the taxes on iced tea sellers
D) higher prices for beignets, which is a complement in consumption for iced tea

Question 73

Use Table: Supply and Demand Schedule for Walking Tours. What is the new equilibrium price and quantity in this market if at every price 30 fewer walking tours are demanded?
​

A) Price is $30, and quantity is 40.
B) Price is $20, and quantity is 50.
C) Price is $60, and quantity is 40.
D) Price is $10, and quantity is 30.

Question 74

An increase in supply causes what changes in a market?

A) Price increases, and quantity decreases.
B) Price decreases, and quantity increases.
C) Price increases, and quantity increases.
D) Price decreases, and quantity decreases.

Question 75

Why does an increase in supply cause a decrease in a good's equilibrium price?

A) There is a surplus at the old price, which leads firms to charge a lower price.
B) There is a shortage at the old price, which leads to firms to charge a lower price.
C) An increase in supply causes a decrease in demand.
D) An increase in supply causes an increase in demand.

Question 76

How do the price and quantity change for a good if the cost of producing the good decreases?

A) Price increases, and quantity increases.
B) Price increases, and quantity decreases.
C) Price decreases, and quantity increases.
D) Price decreases, and quantity decreases.

Question 77

How do the price and quantity change for lawn chairs if the cost of labor used to make lawn chairs decreases?

A) Price increases, and quantity decreases.
B) Price decreases, and quantity increases.
C) Price increases, and quantity increases.
D) Price decreases, and quantity decreases.

Question 78

How do the price and quantity change for lawn chairs if the number of firms producing lawn chairs increases?

A) Price increases, and quantity decreases.
B) Price decreases, and quantity increases.
C) Price decreases, and quantity decreases.
D) Price increases, and quantity increases.

Question 79

How do the price and quantity change in the market for lawn chairs in July if firms expect the price of lawn chairs to go down in August?

A) Price increases, and quantity decreases.
B) There is no impact on price, and quantity increases.
C) Price decreases, and quantity increases.
D) Price increases, and quantity increases.

Question 80

Which of the following causes a decrease in equilibrium price and an increase in equilibrium quantity?

A) Supply increases.
B) Demand increases.
C) Supply decreases.
D) Demand decreases.