Exam 4: Supply and Demand: An Initial Look

Which of the following is the correct way to describe equilibrium in a market?

When GM advertises its cars,the company is trying to cause a

The amount of a good sold in a market at a particular price cannot exceed the quantity

When people suddenly want to buy something,supply increases.

At equilibrium,quantity demanded equals quantity supplied.

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

Table 4-1 Use this table for the following questions. Quantity Quantity Price Demanded Supplied \ 10 1,000 5,500 9 2,000 5,000 8 3,000 4,500 7 4,000 4,000 6 5,000 3,500 5 6,000 3,000 4 7,000 2,500 3 8,000 2,000 2 9,000 1,500 1 10,000 1,000 -Refer to Table 4-1.At $10,what is the surplus?

Economists generally recognize that rent controls cause shortages in housing,yet rent controls tend to persist.Why does this occur?

Explain the effect of the following changes on equilibrium price and quantity of a commodity: (a)increase in average incomes. (b)increase in population.

One effect of market intervention is resource misallocation.

To be effective,a price floor must be

Figure 4-22 -Because of falling oil prices in the past,Libya could afford fewer imported goods.Government controls were established to limit imports of cigarettes.In 1985,the market price of Marlboros rose to $70 a carton.Which graph in Figure 4-22 best depicts this situation?

Figure 4-4 -Assume that Figure 4-4 shows demand for orange juice.An increase in the price of soda will change demand from

In 1989,Hurricane Hugo devastated Charleston,South Carolina,leaving residents with no electricity for light or refrigeration,and completely cut off from the outside world by fallen trees and washed-out roads.Consequently,the price of ice rose 1,000 percent and generators 300 percent.Tree removal firms were charging $4,000 to cut up a single tree.Outraged,the city government enacted an emergency law prohibiting price "gouging." This law is an example of

The U.S.government restricts the production of peanuts by limiting production licenses.By also prohibiting imports,the government maintains prices well above levels peanut farmers would obtain if supply were not restricted.Economists call this type of program a(n)

In an attempt to forecast enrollment,a major university hired an economist to give a "head count." One variable which she would probably emphasize more than any other in trying to forecast this is

If the government puts price controls on medical care,this will increase the supply of affordable care in the United States.

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

Rent controls are most often designed to protect the investment made by apartment building owners.

During the Revolutionary War,the Pennsylvania legislature attempted to help the Continental Army by enacting