Question 1

Figure 3.3
-Figure 3.3 illustrates the demand for tacos. Assume that tacos and burritos are substitutes. A decrease in the price of burritos would bring about a movement from

Accepted Answer

A decrease in the price of burritos, a substitute for tacos, would decrease the demand for tacos, shifting the demand curve from D2 to D0.

Question 2

Figure 3.3
-Figure 3.3 illustrates the demand for tacos. An increase in the demand for tacos is represented by the movement from

Accepted Answer

An increase in demand is shown by a shift of the demand curve to the right, which is represented by moving from D0 to D1.

Question 3

If the quantity of a product demanded is greater than the quantity of a product supplied, there is pressure in the market to push the price downward.

Accepted Answer

If the quantity of a product demanded is greater than the quantity of a product supplied, there is pressure in the market to push the price upward, not downward. This is because the shortage of supply creates competition among buyers, leading them to bid up the price in order to secure the limited quantity available.

Question 4

Suppose that a market for a product is in equilibrium at a price of $5 per unit. At any price above $5 per unit

Accepted Answer

At any price above $5 per unit, sellers will be willing to supply more units of the product than buyers are willing to purchase. This will create an excess supply or surplus of the product in the market.

Question 5

Figure 3.3
-Figure 3.3 illustrates the demand for tacos. An increase in price of tacos would bring about a movement from

Accepted Answer

The answer of  Figure 3.3
-Figure 3.3 illustrates the demand...

Question 6

Figure 3.3
-Figure 3.3 illustrates the demand for tacos. Assume tacos are an inferior good. An increase in income would bring about a movement from

Accepted Answer

An increase in income would decrease the demand for an inferior good like tacos, shifting the demand curve from D2 to D1.

Question 7

Excess supply in an unregulated market will cause the price of a product to fall.

Accepted Answer

When there is excess supply, it means that there are more goods available in the market than there are buyers to purchase them. This creates a situation where sellers have to compete with each other to sell their goods, leading to a decrease in the price of the product as they try to lure buyers with lower prices.

Question 8

Suppose that the quantity of cars demanded exceeds the quantity of cars supplied. We would expect that

Accepted Answer

Whenever the quantity demanded exceeds the quantity supplied, it creates a shortage in the market. This leads to an increase in the price of the good (in this case, cars) as buyers compete with each other to obtain the limited supply available. Therefore, the best choice is A)the price of cars will increase.

Question 9

Figure 3.3
-Figure 3.3 illustrates the demand for tacos. Assume tacos are a normal good. An increase in income would bring about a movement from

Accepted Answer

An increase in income for a normal good leads to an increase in demand, shifting the demand curve to the right from D0 to D1.

Question 10

Suppose that the quantity of cars supplied exceeds the quantity of cars demanded. We would expect that

Accepted Answer

If the quantity of cars supplied exceeds the quantity of cars demanded, there will be a surplus of cars. In order to sell the excess inventory, suppliers will need to lower the price of cars to entice buyers to purchase. This will lead to a decrease in the price of cars, as indicated by choice B.

Question 11

Figure 3.3
-Figure 3.3 illustrates the demand for tacos. Assume that tacos and beer are complements. A decrease in the price of beer would bring about a movement from

Accepted Answer

A decrease in the price of beer, a complement to tacos, would increase the demand for tacos, shifting the demand curve from D0 to D2.

Question 12

The government sometimes creates an excess demand for a product by setting a maximum price at which the product may be sold to consumers. This is sometimes called a

Accepted Answer

A price ceiling is a government-imposed limit on how high a price can be charged for a particular good or service. This creates excess demand in the market, as consumers are willing to pay more than the price ceiling, but suppliers are not able to charge more than the set price. This can lead to shortages of the product, as suppliers may not be incentivized to produce more goods at a lower price.

Question 13

Governments sometime create an excess demand for a product by setting a maximum price that is less than the equilibrium price, resulting in a permanent excess demand for the product. This is known as a price floor.

Accepted Answer

A price floor is actually a minimum price that the government sets, above the equilibrium price, with the intention of ensuring that producers receive a higher income and quantity supplied remains high. This results in a permanent excess supply or surplus of the product.

Question 14

Governments sometime create an excess supply of a product by setting a minimum price that is greater than the equilibrium price, resulting in a permanent excess supply of the product. This is known as a price ceiling.

Accepted Answer

The scenario described is actually a price floor, not a price ceiling. A price ceiling is when the government sets a maximum price that is less than the equilibrium price, resulting in a permanent excess demand for the product.

Question 15

Figure 3.3
-Figure 3.3 illustrates the demand for tacos. An increase in the number of consumers in the market would bring about a movement from

Accepted Answer

An increase in the number of consumers would shift the demand curve to the right, indicating an increase in demand, which is represented by a shift from D0 to D2.

Question 16

Figure 3.3
-Figure 3.3 illustrates the demand for tacos. Assume that tacos and beer are complements. An increase in the price of beer would bring about a movement from

Accepted Answer

An increase in the price of beer, a complement to tacos, would decrease the demand for tacos, shifting the demand curve from D2 to D1.

Question 17

A government sometimes creates an excess supply of a product by setting a minimum price at which the product may be sold to consumers. This is sometimes called a

Accepted Answer

A price floor is a government-imposed minimum price that is set above the equilibrium price, resulting in an excess supply of the product. This can lead to a surplus of the product that cannot be sold at the minimum price, potentially causing waste or inefficiency in the market. Price ceilings, on the other hand, are maximum prices that are set below the equilibrium price, resulting in a shortage of the product. Taxes and subsidies are different government interventions in markets that can affect the price and quantity of products, but they do not necessarily create an excess supply or demand.

Question 18

Figure 3.3
-Figure 3.3 illustrates the demand for tacos. A decrease in the demand for tacos is represented by the movement from

Accepted Answer

A decrease in demand is shown by a leftward shift of the demand curve, which is represented by the movement from D2 to D1.

Question 19

Excess demand in an unregulated market will cause the price of a product to fall.

Accepted Answer

Excess demand in an unregulated market will actually cause the price of a product to rise, as consumers compete to purchase the limited supply of the product. In a regulated market, however, the government may intervene to limit price increases in the face of excess demand.

Question 20

Suppose that a market for a product is in equilibrium at a price of $3 per unit. At any price below $3 per unit

Accepted Answer

At any price below the equilibrium price of $3 per unit, the price will be lower than the market's natural equilibrium point. Because of this, an excess demand for the product will occur since the price is lower and more consumers will want to buy the product at that price. Therefore, the best choice is A.

Quiz 3: Demand, Supply, and Market Equilibrium

Figure 3.3 -Figure 3.3 illustrates the demand for tacos. Assume that tacos and burritos are substitutes. A decrease in the price of burritos would bring about a movement from

Figure 3.3 -Figure 3.3 illustrates the demand for tacos. An increase in the demand for tacos is represented by the movement from

If the quantity of a product demanded is greater than the quantity of a product supplied, there is pressure in the market to push the price downward.

Suppose that a market for a product is in equilibrium at a price of $5 per unit. At any price above $5 per unit

Figure 3.3 -Figure 3.3 illustrates the demand for tacos. An increase in price of tacos would bring about a movement from

Figure 3.3 -Figure 3.3 illustrates the demand for tacos. Assume tacos are an inferior good. An increase in income would bring about a movement from

Excess supply in an unregulated market will cause the price of a product to fall.

Suppose that the quantity of cars demanded exceeds the quantity of cars supplied. We would expect that

Figure 3.3 -Figure 3.3 illustrates the demand for tacos. Assume tacos are a normal good. An increase in income would bring about a movement from

Suppose that the quantity of cars supplied exceeds the quantity of cars demanded. We would expect that

Figure 3.3 -Figure 3.3 illustrates the demand for tacos. Assume that tacos and beer are complements. A decrease in the price of beer would bring about a movement from

The government sometimes creates an excess demand for a product by setting a maximum price at which the product may be sold to consumers. This is sometimes called a

Governments sometime create an excess demand for a product by setting a maximum price that is less than the equilibrium price, resulting in a permanent excess demand for the product. This is known as a price floor.

Governments sometime create an excess supply of a product by setting a minimum price that is greater than the equilibrium price, resulting in a permanent excess supply of the product. This is known as a price ceiling.

Figure 3.3 -Figure 3.3 illustrates the demand for tacos. An increase in the number of consumers in the market would bring about a movement from

Figure 3.3 -Figure 3.3 illustrates the demand for tacos. Assume that tacos and beer are complements. An increase in the price of beer would bring about a movement from

A government sometimes creates an excess supply of a product by setting a minimum price at which the product may be sold to consumers. This is sometimes called a

Figure 3.3 -Figure 3.3 illustrates the demand for tacos. A decrease in the demand for tacos is represented by the movement from

Excess demand in an unregulated market will cause the price of a product to fall.

Suppose that a market for a product is in equilibrium at a price of $3 per unit. At any price below $3 per unit