Question 1

In 2004,hurricanes destroyed a large portion of Florida's grapefruit crop.How did this affect the market price and market quantity of grapefruit?

Accepted Answer

The answer of In 2004,hurricanes destroyed a large portion of...

Question 2

If the quantity demanded for a product exceeds the quantity supplied,the market price will rise until
A)the quantity demanded equals the quantity supplied.The product will then no longer be scarce.
B)quantity demanded equals quantity supplied.The equilibrium price will then be greater than the market price.
C)only wealthy consumers will be able to afford the product.
D)quantity demanded equals quantity supplied.The market price will then equal the equilibrium price.

Accepted Answer

When the quantity demanded exceeds the quantity supplied, there is a shortage in the market. This leads to an increase in the market price until it reaches the equilibrium price, where the quantity demanded equals the quantity supplied. At this point, there is no longer a shortage in the market and the market price equals the equilibrium price. Therefore, the correct choice is D.

Question 3

Market equilibrium occurs where supply equals demand.

Accepted Answer

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

Question 4

A surplus is defined as the situation that exists when the quantity of a good supplied is greater than the quantity demanded.

Accepted Answer

This is the definition of a surplus.

Question 5

Which of the following is evidence of a shortage of chocolate?
A)Firms lower the price of chocolate.
B)The price of chocolate is raised in order to increase sales.
C)The equilibrium price of chocolate falls due to a decrease in demand.
D)The quantity of chocolate demanded is greater than the quantity supplied.

Accepted Answer

When the quantity of chocolate demanded is greater than the quantity supplied, it indicates a shortage of chocolate. This could lead to consumers not being able to purchase their desired amount of chocolate, resulting in prices being raised to balance demand and supply.

Question 6

A shortage is defined as the situation that exists when the quantity of a good supplied is greater than the quantity demanded.

Accepted Answer

A shortage exists when the quantity demanded of a good is greater than the quantity supplied.

Question 7

Even when the demand for one good is high,the price of the good is also affected by supply.The textbook illustrates this by comparing the price of two items that were auctioned on the same day.Which of the following describes the results of the auction?
A)A letter written by Abraham Lincoln sold for a higher price than a letter written by John Wilkes Booth.
B)A letter written by Abraham Lincoln was sold for a higher price than a letter written by Adam Smith.
C)A letter written by John Wilkes Booth sold for a higher price than a letter written by Lee Harvey Oswald.
D)A letter written by John Wilkes Booth sold for a higher price than a letter written by Abraham Lincoln.

Accepted Answer

The question mentions that the price of two items that were auctioned on the same day was compared. The answer choice D presents a scenario where a letter written by John Wilkes Booth sold for a higher price than a letter written by Abraham Lincoln. This implies that even though the demand for both items may have been high, the supply for the letter written by John Wilkes Booth was relatively lower, driving up its price.

Question 8

Market equilibrium occurs where the quantity supplied is equal to the quantity demanded.

Accepted Answer

This is the definition of market equilibrium according to the law of supply and demand.

Question 9

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 10

Competitive market equilibrium is a market equilibrium with many buyers and sellers.

Accepted Answer

Competitive market equilibrium is characterized by a large number of buyers and sellers, none of whom can influence the market price on their own. In this type of equilibrium, the market price and quantity are determined by the intersection of the demand and supply curves. Therefore, option A is correct.

Question 11

Draw a supply and demand graph showing an equilibrium price of $50 and an equilibrium quantity of 200 units.Explain what would happen if the selling price was $75,and illustrate this on the graph.Explain what would happen if the selling price was $25,and illustrate this on the graph.Be sure to label each axis and curve on the graph.

Accepted Answer

The answer of Draw a supply and demand graph showing...

Question 12

It is possible for a market for a good to experience a surplus and a shortage at the same time.

Accepted Answer

A market cannot experience a surplus and a shortage at the same time because a surplus occurs when supply exceeds demand, while a shortage occurs when demand exceeds supply. These are mutually exclusive conditions.

Question 13

A surplus occurs when the actual selling price is above the market equilibrium price.

Accepted Answer

A surplus by definition refers to the situation where the quantity supplied exceeds the quantity demanded at the current price, which would occur when the actual selling price is above the equilibrium price.

Question 14

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

Accepted Answer

This statement is a basic principle of supply and demand in economics.

Question 15

A shortage occurs when the market price is lower than the equilibrium price.

Accepted Answer

The answer of A shortage occurs when the market price...

Question 16

If the demand for letters written by Abraham Lincoln is higher than the demand for letters written by John Wilkes Booth,what would have to be true for the market equilibrium prices for these letters to be equal?
A)The supply of Lincoln letters would have to be less than the supply of Booth letters.
B)The supply of Booth letters would have to be less than the supply of Lincoln letters.
C)The supply of Lincoln letters and the supply of Booth letters would have to be equal.
D)If the demand for Lincoln letters is greater than the demand for Booth letters,the market equilibrium price for Lincoln letters will always be greater than the market equilibrium price for Booth letters.

Accepted Answer

This is a basic supply and demand question. If the demand for Lincoln letters is higher, then the price for Lincoln letters will be higher. However, if the market equilibrium prices for these letters are equal, then the supply for Booth letters would have to be less than the supply for Lincoln letters, as there would need to be enough Booth letters to meet the demand at the same price as the higher demand for Lincoln letters. Therefore, choice B is correct. Choice A is incorrect because it suggests that the market equilibrium price for Booth letters would be higher, which contradicts the question. Choice C is incorrect because it suggests that the market equilibrium prices would be equal without taking into account the higher demand for Lincoln letters. Choice D is incorrect because it makes a blanket statement that is not necessarily true in all cases.

Question 17

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

Accepted Answer

The answer of Scarcity is defined as the situation that...

Question 18

In response to a shortage the market price of a good will rise;as the price rises,the demand will decrease and supply will increase until equilibrium is reached.

Accepted Answer

The answer of In response to a shortage the market...

Question 19

A surplus occurs when the market price is lower than the equilibrium price.

Accepted Answer

A surplus occurs when the quantity supplied exceeds the quantity demanded at the given price. This only happens when the market price is higher than the equilibrium price. When the market price is lower than the equilibrium price, there is a shortage.

Question 20

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 labor market over the next fifteen years?

Accepted Answer

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

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