Question 1

Price tends to be in equilibrium where supply and demand intersect because when quantity supplied:

Accepted Answer

When quantity supplied equals quantity demanded, the market is in equilibrium, and there is no pressure for prices to change.

Question 2

If quantity supplied exceeds quantity demanded, there is a tendency for:

Accepted Answer

When quantity supplied exceeds quantity demanded, there is a surplus, leading to downward pressure on prices until equilibrium is restored.

Question 3

The point at which the supply curve and the demand curve intersect is called:

Accepted Answer

The intersection of the supply and demand curves is called equilibrium because at this point, the quantity demanded equals the quantity supplied, resulting in no tendency for the price to change.

Question 4

When quantity supplied is greater than quantity demanded, prices tend to:

Accepted Answer

When quantity supplied is greater than quantity demanded, there is a surplus in the market, which typically leads to a decrease in prices as sellers try to sell off excess inventory.

Question 5

Suppose that the table shown shows the demand and supply schedules for pork bellies. Which of the following statements is true? $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Price } \
\text { (\$/lb.) }
\end{array} & \text { Quantity demanded (lbs.) } & \text { Quantity Supplied (lbs.) } \
\hline \$ 0.10 & 30,000 & 5,000 \
\hline \$ 0.20 & 25,000 & 10,000 \
\hline \$ 0.50 & 20,000 & 20,000 \
\hline \$ 0.75 & 15,000 & 30,000 \
\hline \$ 0.95 & 5,000 & 40,000 \
\hline
\end{array}$$

Accepted Answer

The answer of Suppose that the table shown shows the...

Question 6

In the early 2000s, the number of Eastern Europeans moving to England to join the labor force increased. This has led to fears by British citizens that Eastern Europeans will steal jobs from Western Europeans. What best describes their fear?

Accepted Answer

The fear is that an increase in the supply of labor, due to more Eastern Europeans joining the workforce, will lead to a decrease in wages.

Question 7

Suppose the supply and demand tables shown reflect the supply and demand for milk per week. What is the equilibrium price and quantity of milk? $\begin{array}{|c|c|c|}
\hline \begin{array}{c}
\text { Price } \
\text { (per gallon) }
\end{array} & \begin{array}{c}
\text { Quantity demanded (gallons per } \
\text { week) }
\end{array} & \begin{array}{c}
\text { Quantity Supplied (gallons per } \
\text { week) }
\end{array} \
\hline \$ 1 & 2,000 & 1,000 \
\hline \$ 2 & 1,500 & 1,500 \
\hline \$ 3 & 1,000 & 2,000 \
\hline \$ 4 & 500 & 2,500 \
\hline
\end{array}$

Accepted Answer

The answer of Suppose the supply and demand tables shown...

Question 8

Suppose that the table shown shows the demand and supply schedules for pork bellies. There is a shortage of 15,000 pounds at a price of: $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Price } \
\text { (\$/lb.) }
\end{array} & \text { Quantity demanded (lbs.) } & \text { Quantity Supplied (lbs.) } \
\hline \$ 0.10 & 30,000 & 5,000 \
\hline \$ 0.20 & 25,000 & 10,000 \
\hline \$ 0.50 & 20,000 & 20,000 \
\hline \$ 0.75 & 15,000 & 30,000 \
\hline \$ 0.95 & 5,000 & 40,000 \
\hline
\end{array}$$

Accepted Answer

The answer of Suppose that the table shown shows the...

Question 9

Demand for healthy kidneys is high in both India in Nepal. But it is also illegal to buy or sell organs. Despite the legal and social disapproval, there is an illegal market for organs. Assuming the legal and social disapproval does not influence buyers but discourages sellers from offering organs, the disapproval will:

Accepted Answer

The disapproval discourages sellers, reducing supply, which raises prices but lowers the quantity available in the market.

Question 10

If supply and demand intersect at a price of $5.00, then a reduction in price from $6.00 to $5.00 will cause an increase in quantity:

Accepted Answer

When the price decreases from $6.00 to $5.00, which is the equilibrium price, the quantity demanded increases, the quantity supplied decreases, and any surplus that existed at $6.00 is alleviated.

Question 11

Suppose that the table shown shows the demand and supply schedules for pork bellies. Based on the table, the equilibrium price of pork bellies is: $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Price } \
\text { (\$/lb.) }
\end{array} & \text { Quantity demanded (lbs.) } & \text { Quantity Supplied (lbs.) } \
\hline \$ 0.10 & 30,000 & 5,000 \
\hline \$ 0.20 & 25,000 & 10,000 \
\hline \$ 0.50 & 20,000 & 20,000 \
\hline \$ 0.75 & 15,000 & 30,000 \
\hline \$ 0.95 & 5,000 & 40,000 \
\hline
\end{array}$$

Accepted Answer

The equilibrium price is where the quantity demanded equals the quantity supplied. At $0.50/lb., both the quantity demanded and supplied are 20,000 lbs.

Question 12

Suppose the supply and demand tables shown reflect the supply and demand for milk per week. At a price of $4, there is a: $\begin{array}{|c|c|c|}
\hline \begin{array}{c}
\text { Price } \
\text { (per gallon) }
\end{array} & \begin{array}{c}
\text { Quantity demanded (gallons per } \
\text { week) }
\end{array} & \begin{array}{c}
\text { Quantity Supplied (gallons per } \
\text { week) }
\end{array} \
\hline \$ 1 & 2,000 & 1,000 \
\hline \$ 2 & 1,500 & 1,500 \
\hline \$ 3 & 1,000 & 2,000 \
\hline \$ 4 & 500 & 2,500 \
\hline
\end{array}$

Accepted Answer

At a price of $4, the quantity supplied is 2,500 gallons, and the quantity demanded is 500 gallons, resulting in a surplus of 2,000 gallons per week (2,500 - 500 = 2,000).

Question 13

The increase in the availability of organic foods likely:

Accepted Answer

An increase in the availability of organic foods suggests a rightward shift in the supply curve, which typically results in a higher equilibrium quantity and a lower equilibrium price, assuming demand remains constant.

Question 14

When the number of Alaskan fishermen increased, salmon prices fell to record lows. This could be shown graphically by a shift in the:

Accepted Answer

An increase in the number of fishermen would increase the supply of salmon, shifting the supply curve to the right, leading to lower prices.

Question 15

Using the supply and demand model, what is the best way to show the effects on the plywood market of households preparing for a hurricane? (Note: people use plywood to board up their homes to protect them from damage from a hurricane.)

Accepted Answer

When households prepare for a hurricane, the demand for plywood increases as people buy more to protect their homes, shifting the demand curve to the right. The supply curve remains unchanged in the short term.

Question 16

Suppose that the following table shows the supply and demand schedules for Arabian light crude oil on the free market: $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Price } \
\text { (Dalars/barrel) }
\end{array} & \begin{array} { c } 
\text { Quantity demanded (mil. } \
\text { barrels per day) }
\end{array} & \begin{array} { c } 
\text { Quantity Supplied (mil. } \
\text { barrels per day) }
\end{array} \
\hline 26 & 14 & 10 \
\hline 27 & 13 & 11 \
\hline 28 & 12 & 12 \
\hline 29 & 11 & 13 \
\hline 30 & 10 & 14 \
\hline
\end{array}$$ Given the information in the table, the only price at which there is neither shortage nor surplus is:

Accepted Answer

At $28 per barrel, the quantity demanded equals the quantity supplied (12 million barrels per day), indicating market equilibrium with no shortage or surplus.

Question 17

Suppose the given supply and demand tables reflect the supply and demand for milk per week. At a price of $1, there is a: $\begin{array}{|c|c|c|}
\hline \begin{array}{c}
\text { Price } \
\text { (per gallon) }
\end{array} & \begin{array}{c}
\text { Quantity demanded (gallons per } \
\text { week) }
\end{array} & \begin{array}{c}
\text { Quantity Supplied (gallons per } \
\text { week) }
\end{array} \
\hline \$ 1 & 2,000 & 1,000 \
\hline \$ 2 & 1,500 & 1,500 \
\hline \$ 3 & 1,000 & 2,000 \
\hline \$ 4 & 500 & 2,500 \
\hline
\end{array}$

Accepted Answer

At a price of $1, the quantity demanded is 2,000 gallons, and the quantity supplied is 1,000 gallons, resulting in a shortage of 1,000 gallons per week.

Question 18

If you observe a market where quantity demanded doesn't equal quantity supplied, a logical conclusion is that:

Accepted Answer

Social and political forces can cause market imbalances by influencing prices, regulations, or availability, leading to situations where quantity demanded does not equal quantity supplied.

Question 19

In a market where there are strong social and political forces:

Accepted Answer

In a market with strong social and political forces, these external factors can prevent the market from reaching equilibrium, meaning quantity demanded might not equal quantity supplied.

Question 20

When gasoline prices fall, the demand for alternative fuel cars likely:

Accepted Answer

When gasoline prices fall, consumers are less incentivized to purchase alternative fuel cars, leading to a decrease in demand. This decrease in demand results in a lower equilibrium price and quantity for alternative fuel cars.

Quiz 4: Supply and Demand