Question 1

In the spring of 2016 there was a severe forest fire in Alberta, which forced the evacuation of Fort McMurray and the shut down of many oil sands operations.As a result, there was less crude oil produced in Alberta than normal.At the pre-fire equilibrium price (i.e., at the initial equilibrium price), we would expect to see

Accepted Answer

With the decrease in crude oil production, there would be a decrease in the supply of gasoline. This would cause the quantity demanded to exceed the quantity supplied, leading to a shortage of gasoline. Therefore, the pre-fire equilibrium price would no longer result in the quantity demanded equaling the quantity supplied.

Question 2

Which of the following is evidence of a surplus of bananas?

Accepted Answer

When there is a surplus of bananas, there is an excess supply of bananas in the market, which leads to a decrease in the price of bananas. Lowering the price will increase sales and reduce the surplus. Therefore, option B is the correct answer. Option A is incorrect because an increase in price would occur if there is a shortage of bananas. Option C is incorrect because an increase in demand would likely lead to an increase in price instead of a surplus. Option D is incorrect because if the quantity demanded is greater than the quantity supplied, it indicates a shortage, not a surplus.

Question 3

Currently, China buys more than 40% of the Canadian canola crop. In the summer of 2016 the Chinese government was planning to implement policies that would severely limit the ability of Canadian farmers to sell canola to China.If China were to stop buying Canadian canola what would happen in the market for Canadian canola?

Accepted Answer

The answer of Currently, China buys more than 40% of...

Question 4

Figure 3.10  Alt text for Figure 3.10: In figure 3.10, a graph plotting intersecting supply and demand curves illustrates how supply and demand function in competitive markets.
Long description for Figure 3.10: The x-axis is labelled, Quantity, with the values 0, 200, 400, 500, 600, 700 and 800 marked.The y-axis is labelled, Price, with the values 0, 10.00, 15.00, 20.00 and 25.00 dollars marked.Supply Curve S is a straight line which slopes up from the bottom left corner to the top right corner.4 points are plotted along the curve; (200, 10), (400, 15), (600, 20), and (800, 25).Demand curve D is a straight line which slopes down from the top left corner to the bottom right corner.Curve D intersects the S curve at (600, 20), and passes through another point, (800, 10).All plotted points are connected to the corresponding values on the x and y-axis with dotted lines.
-Refer to Figure 3.10.At a price of $25, how many units will be sold?

Accepted Answer

At a price of $25, according to the demand curve in Figure 3.10, 500 units will be sold. Demand curves typically show the quantity of goods that consumers are willing to buy at different prices, and at the $25 price point, the curve intersects at 500 units.

Question 5

Scarcity is defined as the situation that exists when the quantity demanded for a good is greater than the quantity supplied.

Accepted Answer

Scarcity is defined as the limited availability of resources to meet unlimited wants and needs, not specifically the situation where quantity demanded exceeds quantity supplied.

Question 6

Figure 3.10  Alt text for Figure 3.10: In figure 3.10, a graph plotting intersecting supply and demand curves illustrates how supply and demand function in competitive markets.
Long description for Figure 3.10: The x-axis is labelled, Quantity, with the values 0, 200, 400, 500, 600, 700 and 800 marked.The y-axis is labelled, Price, with the values 0, 10.00, 15.00, 20.00 and 25.00 dollars marked.Supply Curve S is a straight line which slopes up from the bottom left corner to the top right corner.4 points are plotted along the curve; (200, 10), (400, 15), (600, 20), and (800, 25).Demand curve D is a straight line which slopes down from the top left corner to the bottom right corner.Curve D intersects the S curve at (600, 20), and passes through another point, (800, 10).All plotted points are connected to the corresponding values on the x and y-axis with dotted lines.
-Refer to Figure 3.10.If the price is $25,

Accepted Answer

At a price of $25, the quantity supplied exceeds the quantity demanded, leading to a surplus. The specific numbers (300 units) would depend on the details in Figure 3.10, which indicates the quantities of supply and demand at that price point.

Question 7

Nearly a quarter of China's 1.3 billion people are under the age of 15.How will this affect high school enrollment over the next fifteen years? The labour market over the next fifteen years?

Accepted Answer

The answer of Nearly a quarter of China's 1.3 billion...

Question 8

Market equilibrium occurs where supply equals demand.

Accepted Answer

The answer of Market equilibrium occurs where supply equals demand....

Question 9

If, for a product, the quantity supplied exceeds the quantity demanded, the market price will fall until

Accepted Answer

If the quantity supplied exceeds the quantity demanded, there will be a surplus of the product in the market, and sellers will compete by lowering the price. As the price falls, the quantity demanded will increase and the quantity supplied will decrease until the two become equal, which is the point of equilibrium. At this point, the market price will be equal to the equilibrium price, and the market will be in a state of balance where supply meets demand. Therefore, the correct answer is D - quantity demanded equals quantity supplied.

Question 10

Auctions in recent years have resulted in higher prices paid for Jacques Plante (goalie )hockey cards than Sidney Crosby (forward )rookie cards.What is a reason for this difference in price?

Accepted Answer

There are more Crosby rookie cards available for collectors to buy than there are Plante cards, making Plante's cards rarer and potentially more valuable.

Question 11

At auction experts expect a Jacques Plante hockey card to get a higher price than Sidney Crosby's rookie card.Which of the following events would cause the price difference in these cards to get smaller?

Accepted Answer

C) The demand for Crosby rookie cards increases and the supply of Plante cards increases. This scenario would likely cause Crosby's card value to rise due to increased demand, while Plante's card value could decrease or not rise as much due to increased supply, thus narrowing the price difference between the two.

Question 12

In response to a surplus the market price of a good will fall; as the price falls, the quantity demanded will increase and quantity supplies will decrease until equilibrium is reached.

Accepted Answer

This is the basic law of supply and demand. When there is a surplus of a good, the market price will decrease as suppliers try to sell off excess inventory. As the price falls, consumers will demand more of the good, and suppliers will decrease the quantity they produce until the market reaches equilibrium, where quantity supplied equals quantity demanded.

Question 13

If the price of a product is above equilibrium, what forces it down?

Accepted Answer

The answer of If the price of a product is...

Question 14

Figure 3.11  Alt text for Figure 3.11: In figure 3.11, a graph plotting intersecting supply and demand curves illustrates how supply and demand function in competitive markets.
Long description for Figure 3.11: The x-axis is labelled, Quantity, and is marked from 0 to 8 in increments of 2.The y-axis is labelled, Price, and is marked from 0 to 20 dollars in increments of 5.Curve D is a straight line which slopes down from the top left corner to the bottom right corner.Curve S is a straight line which begins in the bottom left corner and slopes up to the top right corner.The equilibrium of the 2 curves is marked at (4,10).2 points plotted on the demand curve to the left of the equilibrium are (0,20)and (2,15).2 points plotted on the demand curve to the right of the equilibrium are (6,5)and (8,0).2 points plotted on the supply curve to the right of the equilibrium are (6,15)and (8,20).2 points plotted on the supply curve to the left of the equilibrium are (2,5)and (0,0).
-Refer to Figure 3.11.At a price of $5,

Accepted Answer

At a price of $5, the quantity demanded would be 6 units (point on the demand curve where it intersects with a price of $5). However, at this price, the quantity supplied would only be 2 units (point on the supply curve where it intersects with a price of $5), resulting in a shortage of 4 units. Therefore, choice D is the correct answer.

Question 15

Figure 3.9  Alt text for Figure 3.9a: In figure 3.9a, a graph plotting intersecting supply and demand curves represents one of the two markets for original Michelangelo sculptures and Ray Ban sunglasses.
Long description for Figure 3.9a: The x-axis is labelled, Quantity, and the y-axis is labelled, Price.Curve Supply is a straight line which slopes up from the bottom left corner to the top right corner.Curve Demand is a straight line which slopes down from the top left corner to the bottom right corner.The 2 curves intersect at their respective midpoints.
Alt text for Figure 3.9b: In figure 3.9b, a graph plotting intersecting supply and demand curves represents one of the two markets for original Michelangelo sculptures and Ray Ban sunglasses.
Long description for Figure 3.9b: The x-axis is labelled, Quantity, and the y-axis is labelled, Price.Curve Demand is a straight line which slopes down from the top left corner to the bottom right corner.Curve Supply is a straight vertical line which begins from the midpoint of the x axis.The 2 curves intersect at their respective midpoints.
-Refer to Figure 3.9.The figure above shows the supply and demand curves for two markets: the market for original Michelangelo sculptures and the market for Ray Ban sunglasses.Which graph most likely represents which market?

Accepted Answer

Graph B, likely representing the market for original Michelangelo sculptures, shows a vertical supply curve, indicating a perfectly inelastic supply, which makes sense because the number of original sculptures is fixed and cannot increase. Graph A, likely representing the market for Ray Ban sunglasses, shows a more traditional supply and demand curve, indicating that both supply and demand can change over time, which is typical for mass-produced goods like sunglasses.

Question 16

Figure 3.10  Alt text for Figure 3.10: In figure 3.10, a graph plotting intersecting supply and demand curves illustrates how supply and demand function in competitive markets.
Long description for Figure 3.10: The x-axis is labelled, Quantity, with the values 0, 200, 400, 500, 600, 700 and 800 marked.The y-axis is labelled, Price, with the values 0, 10.00, 15.00, 20.00 and 25.00 dollars marked.Supply Curve S is a straight line which slopes up from the bottom left corner to the top right corner.4 points are plotted along the curve; (200, 10), (400, 15), (600, 20), and (800, 25).Demand curve D is a straight line which slopes down from the top left corner to the bottom right corner.Curve D intersects the S curve at (600, 20), and passes through another point, (800, 10).All plotted points are connected to the corresponding values on the x and y-axis with dotted lines.
-Refer to Figure 3.10.If the current market price is $25, the market will achieve equilibrium through

Accepted Answer

In a market, if the current price is above the equilibrium price, there will be a surplus of goods (since suppliers are willing to supply more at that price than consumers are willing to buy). This surplus puts downward pressure on the price. As the price decreases, the quantity supplied decreases (because suppliers are less willing to supply at lower prices) and the quantity demanded increases (because consumers are more willing to buy at lower prices), moving the market towards equilibrium. This process is described in option C.

Question 17

Figure 3.8  Alt text for Figure 3.8: In figure 3.8, a graph plotting intersecting supply and demand curves represents the market for canvas tote bags.
Long description for Figure 3.8: The x-axis is labelled, Quantity, with the values 0, 10, 20, 50, 75, and 100 marked.The y-axis is labelled, Price, with the values 0, 15, 25, and 50 dollars marked.Curve D is a straight line which slopes down from the top left corner to the bottom right corner.Curve S is a straight line which begins in the bottom left corner and slopes up to the top right corner.The equilibrium of the 2 curves is (50,25).The point plotted on curve S to the left of equilibrium is (20,15).The point plotted on curve D to the right of point of equilibrium is (75,15).The point plotted to the right of equilibrium on curve S is (100,50).The point plotted to the right of the equilibrium on curve D is (10,50).
-Refer to Figure 3.8.The figure above represents the market for canvas tote bags.Compare the conditions in the market when the price is $50 and when the price is $35.Which of the following describes how the market differs at these prices?

Accepted Answer

At a price of $50, the market is in equilibrium with a quantity of 50. At a price of $35, the quantity demanded exceeds the quantity supplied, resulting in a shortage. Therefore, the difference between quantity supplied and quantity demanded is greater at $35 than at $50. A surplus is not present at either price, making options A and C incorrect. Option D is incorrect as well because it does not differentiate between the two prices.

Question 18

At market equilibrium,

Accepted Answer

At market equilibrium, the quantity demanded by buyers is exactly equal to the quantity supplied by sellers. This means that there is no shortage or surplus of the product in the market. Therefore, option B - "quantity demanded equals quantity supplied" - is the correct choice.

Question 19

Table 3.3 
-Refer to Table 3.3.The table contains information about the corn market.Use the table to answer the following questions.
a.What are the equilibrium price and quantity of corn?
b.Suppose the prevailing price is $9 per bushel.Is there a shortage or a surplus in the market?
c.What is the quantity of the shortage or surplus?
d.How many bushels will be sold if the market price is $9 per bushel?
e.If the market price is $9 per bushel, what must happen to restore equilibrium in the market?
f.At what price will suppliers be able to sell 22,000 bushels of corn?
g.Suppose the market price is $21 per bushel.Is there a shortage or a surplus in the market?
h.What is the quantity of the shortage or surplus?
i.How many bushels will be sold if the market price is $21 per bushel?
j.If the market price is $21 per bushel, what must happen to restore equilibrium in the market?

Accepted Answer

The answer of Table 3.3 
-Refer to Table 3.3.The table...

Question 20

At a product's equilibrium price,

Accepted Answer

At equilibrium price, the demand for the product from buyers is equal to the supply of the product from the sellers. It means that all buyers who are willing and able to pay the price will find a seller for the product, and all sellers who are willing to accept the price will find buyers for their products. However, it does not guarantee that everyone who needs the product will be able to buy it, regardless of their ability to pay, nor does it suggest that the federal government will provide the product to people who cannot afford it.

Quiz 3: Where Prices Come From: The Interaction of Supply and Demand