Question 1

When quantity supplied equals quantity demanded, there is:

Accepted Answer

When quantity supplied equals quantity demanded, it means that there is no excess supply or demand, which results in a market-clearing price. This price is also known as the equilibrium price, which balances the supply and demand in the market.

Question 2

Which of the following best explains the determination of the equilibrium price of a product?

Accepted Answer

The equilibrium price of a product is determined by the interaction of supply and demand. When supply and demand are equal, prices will settle at the point where the quantity of goods or services supplied is equal to the quantity demanded by consumers. Factors like production costs, government decisions, and supply levels can all influence the equilibrium price, but ultimately it is the interaction of supply and demand that determines the final price point.

Question 3

Which of the following is true about the market equilibrium?

Accepted Answer

The concept of market equilibrium states that at a particular price level, the quantity demanded by consumers and the quantity supplied by producers are equal. As the price increases, consumers tend to demand less of the product while producers tend to supply more. Thus, the quantity demanded decreases and the quantity supplied increases with a rise in price level. Therefore, option D is the correct statement as compared to the other answer choices.

Question 4

The use of a price system eliminates:

Accepted Answer

The use of a price system helps to alleviate shortages and surpluses by adjusting prices to reflect changes in supply and demand. However, it does not eliminate scarcity or equilibrium, and it can still be impacted by changes in supply and demand.

Question 5

When the price of a good is below its equilibrium level, a:

Accepted Answer

When the price of a good is below its equilibrium level, there will be a shortage of the good because the quantity demanded will exceed the quantity supplied. This shortage will put upward pressure on the price as consumers will be more willing to pay a higher price to get the limited amount of the good available. As the price increases, suppliers will be incentivized to produce more of the good, moving towards equilibrium.

Question 6

If a shortage exists in a market then:

Accepted Answer

If a shortage exists in a market, it means that the quantity demanded of a good or service is greater than the quantity supplied. This usually occurs when the price is below equilibrium. As a result, the price will rise in the near future to eliminate the shortage and reach equilibrium where the quantity demanded will equal the quantity supplied. Therefore, all of the above choices A, B, and C are correct.

Question 7

Assume Q_s represents the quantity supplied at a given price and Q_d represents quantity demanded at the same given price. Which of the following market conditions produces an upward movement of the price?

Accepted Answer

When quantity supplied is less than quantity demanded, there is excess demand in the market. In this situation, buyers compete with each other to purchase the limited quantity of goods available, which leads to an increase in price. Therefore, only option C, where Q_s = 750 and Q_d = 1,000, indicates excess demand and will result in an upward movement of the price.

Question 8

If equilibrium is present in a market:

Accepted Answer

Equilibrium is a state in which the quantity demanded is exactly equal to the quantity supplied. This means that there is no shortage or surplus in the market. Therefore, option B is the correct choice.

Question 9

Exhibit 3-6  Milk market  In Exhibit 3-6, which of the following is true about the milk market?

Accepted Answer

The answer of Exhibit 3-6  Milk market  In Exhibit 3-6,...

Question 10

Market equilibrium is:

Accepted Answer

Market equilibrium is described by all three statements. It refers to the point where there is no shortage or surplus of a good, where the plans of buyers and sellers align, and where the supply and demand curves intersect on a graphical representation of the market.

Question 11

The equilibrium price is best defined as the price at which:

Accepted Answer

The equilibrium price is the price at which quantity demanded equals quantity supplied. In other words, it is the price at which the market clears and there is no excess supply or demand. Therefore, the correct answer is D, where quantity demanded is equal to quantity supplied.

Question 12

The most important characteristic of the equilibrium price is that it:

Accepted Answer

The equilibrium price is the price at which the quantity demanded equals the quantity supplied, clearing the market. It is not necessarily guaranteed to guarantee producers' profits or increase/decrease the quantity demanded.

Question 13

All of the following apply to the description of a market in equilibrium except:

Accepted Answer

In a market in equilibrium, there is no excess supply or demand, and the quantity supplied equals the quantity demanded. The equilibrium price is found at the intersection of the supply and demand curves. The price of the good is stable, not falling, in a state of equilibrium.

Question 14

If quantity demanded is greater than quantity supplied, then according to the market process:

Accepted Answer

When quantity demanded is greater than quantity supplied, there is a shortage of the good or service in the market. As a result, consumers will compete to purchase the limited quantity available which will drive up the price until the quantity demanded equals the quantity supplied. Therefore, the price will rise.

Question 15

Which of the following situations results from a ticket price to a concert set below the equilibrium price?

Accepted Answer

The answer of Which of the following situations results from...

Question 16

In a market, competitive forces guarantee that any price other than the equilibrium price is:

Accepted Answer

Competitive forces push prices toward their equilibrium level, where supply and demand are balanced. Any deviation from the equilibrium price will create a temporary situation where either quantity demanded exceeds quantity supplied or quantity supplied exceeds quantity demanded. This situation cannot persist in the long run and will lead to adjustments in prices and/or quantities until the market reaches a new equilibrium. Therefore, any price other than the equilibrium price is temporary.

Question 17

When the price of a good in a market is above equilibrium:

Accepted Answer

The answer of When the price of a good in...

Question 18

If the price of tea is below its equilibrium level, then:

Accepted Answer

When the price of tea is below its equilibrium level, the quantity demanded exceeds the quantity supplied, leading to a shortage.

Question 19

If the current price of a good is the same as that found at the intersection of the market demand and supply curves, then:

Accepted Answer

The intersection of the market demand and supply curves represents the point of market equilibrium, where the quantity demanded equals the quantity supplied. Therefore, if the current price of the good is the same as that found at the intersection of the curves, it means that the market is currently in equilibrium, and there is neither excess demand nor supply.

Question 20

At any price below the equilibrium price, the:

Accepted Answer

The answer of At any price below the equilibrium price,...

Quiz 3: Market Demand and Supply