Deck 3: Market Equilibrium and Shifts

Question 1

Inferior goods are characterized by _____ demand as a result of increased income.

A) higher
B) lower
C) no change in
D) sharp increases in

Answer 1

B
Explanation: Public transportation use tends to fall with increased income because consumers can afford private transportation.

Question 2

Government action can cause a significant market demand shift.

Answer 2

True
Explanation: Government action can cause significant market shifts. If the government required the use of hands-free headsets while driving a car, the sale of those headsets would increase, shifting demand to the right.

Question 3

A normal good is one whose demand rises sharply as income increases.

Answer 3

False
Explanation: Demand for a normal good generally rises in step with increases in income.

Question 4

If a town begins requiring builders to build on one-acre lots,instead of smaller quarter-acre lots,the supply curve for new homes will

A) shift to the left.
B) shift to the right.
C) reach market equilibrium.
D) reflect equilibrium pricing.

Question 5

Excess supply occurs when suppliers are prepared to sell more at a market price than buyers are prepared to purchase.

Question 6

Left to themselves,most markets will eventually reach market equilibrium.

Question 7

After Hurricane Katrina,the supply curve for gasoline

A) shifted to the right.
B) shifted to the left.
C) reached equilibrium.
D) hit market price.

Question 8

A demand shift affects

A) sellers' willingness to purchase at various prices.
B) buyers' willingness to purchase at various prices.
C) businesses only.
D) government intervention.

Question 9

A luxury good is one whose demand ______ as income increases.

A) rises slightly
B) rises sharply
C) decreases
D) stays flat

Question 10

Between 2000 and 2007,many more U.S.furniture stores purchased their furniture from Chinese manufacturers.As a result,the supply curve for furniture

A) shifted to the left.
B) shifted to the right.
C) remained unchanged.
D) showed a marked increase in the price of furniture.

Question 11

If supply is inelastic,then a demand shift will have a bigger effect on quantity than price.

Question 12

A demand shift changes the amount sellers want to supply at various prices.

Question 13

Globalization is one important cause of market shifts.

Question 14

The price at which the quantity supplied equals quantity demanded is the

A) equilibrium quantity.
B) equilibrium market.
C) equilibrium price.
D) market price.

Question 15

Higher income usually means

A) a shift to the left on the demand curve.
B) a static change on the demand curve.
C) higher demand.
D) lower demand.

Question 16

Market equilibrium is the point where quantity supplied and __________ are reasonably in balance.

A) quantity demanded
B) quantity price
C) quantity sold
D) market price

Question 17

Excess demand generally causes prices to go down.

Question 18

With inferior goods,demand will increase with an increase in income.

Question 19

Movement along the demand curve means that the demand schedule ______,and the price _____.

A) stays the same; changes
B) changes; stays the same
C) increases; decreases
D) decreases; increases

Question 20

For most goods and services,an increase in income will mean that the demand curve shifts to the left.

Question 21

Because of global warming,countries that are cooler may see ________ in the supply of grain and agricultural products.

A) a shift to the right
B) a shift to the left
C) no change
D) a curve

Question 22

Hurricane Katrina caused refineries and oil rigs in New Orleans and in the Gulf of Mexico to close down.In the market for gasoline,Hurricane Katrina caused

A) an increase in demand.
B) a decrease in demand.
C) an increase in supply.
D) a decrease in supply.

Question 23

If supply increases,equilibrium price

A) falls.
B) rises.
C) remains stable.
D) reaches equilibrium quantity.

Question 24

The selling prices of houses in 2003 through 2006 reflected which market condition?

A) Excess demand.
B) Excess supply.
C) Market equilibrium.
D) Market price.

Question 25

Most markets,if left alone,will tend toward

A) equilibrium price.
B) market demand.
C) market price.
D) equilibrium balance.

Question 26

A higher price simultaneously __________ the quantity supplied and __________ the quantity demanded,thus reducing the amount of excess __________.

A) increases; decreases; demand
B) increases; decreases; supply
C) decreases; increases; demand
D) decreases; decreases; demand

Question 27

An increase in supply is shown graphically as a __________ shift of the supply curve,and as a result of an increase in supply,equilibrium price will __________.

A) rightward; decrease
B) rightward; increase
C) leftward; decrease
D) leftward; increase

Question 28

The gap between quantity supplied and quantity demanded is usually closed over time by the

A) demand curve.
B) supply curve.
C) market mechanism.
D) invisible face.

Question 29

The price at which the quantity supplied equals the quantity demanded is the

A) market price.
B) equilibrium quantity.
C) equilibrium price.
D) satiation point.

Question 30

How does a lower price alleviate the problem of excess supply?

A) A lower price increases the number of potential sellers and the number of potential buyers.
B) A lower price increases the number of potential sellers and decreases the number of potential buyers.
C) A lower price decreases the number of potential sellers and the number of potential buyers.
D) A lower price decreases the number of potential sellers and increases the number of potential buyers.

Question 31

How might a government cause a demand shift to the right?

A) By increasing taxes.
B) By requiring consumers to purchase certain products.
C) By regulating supplies.
D) By causing a shift in consumer tastes.

Question 32

Eventually,reduced-price hotel rooms will ______ the supply of hotel rooms in a market.

A) leave unchanged
B) increase
C) decrease
D) eliminate

Question 33

Demand is inelastic if

A) the quantity demanded changes along with the price.
B) the quantity demanded does not change very much even if the price changes dramatically.
C) the demand curves to the left.
D) the demand curves to the right.

Question 34

If supply is inelastic,then a demand shift will have a ____ effect on _______ than on quantity.

A) smaller; demand
B) smaller; price
C) bigger; demand
D) bigger; price

Question 35

Movies delivered over the Internet might have what effect on movie theaters?

A) A demand shift to the right.
B) A demand shift to the left.
C) A supply shift to the left.
D) No effect at all.

Question 36

If interest rates go up for a given product,quantity demanded will

A) remain unchanged.
B) decrease.
C) increase.
D) be affected by a shift of the demand curve to the right.

Question 37

Which is NOT an example of inelastic supply?

A) Golf courses in a market.
B) Hotel rooms in a market during a convention.
C) Bottled water.
D) Tickets to a sold-out concert.

Question 38

If a frost suddenly destroyed a big portion of the orange crop,a good with highly elastic demand,what would be the impact on quantity demanded and price?

A) Quantity demanded would decrease a lot, and price would decrease.
B) Quantity demanded would increase a little, and price would remain stable or rise slightly.
C) Quantity demanded would decrease a little, and price would increase sharply.
D) Quantity demanded would decrease a lot, and price would remain stable or rise slightly.

Question 39

What caused the decline in demand for Red Delicious apples?

A) More varieties to choose from.
B) Transportation issues.
C) Consumers found them to be tasteless.
D) Genetic manipulation scared consumers.

Question 40

On the basic supply-demand graph,where the demand curve and supply curve intersect is known as the

A) focal point.
B) equilibrium balance model.
C) quantity demanded.
D) equilibrium price.

Question 41

A demand shift to the right generally leads to

A) higher prices and lower quantities.
B) lower prices and higher quantities.
C) higher prices and higher output.
D) lower prices and higher output.

Question 42

$$\begin{array} { c | c | c } \text { Price } & \begin{array} { c } \text { Quantity } \\\text { Demanded }\end{array} & \begin{array} { c } \text { Quantity } \\\text { Supplied }\end{array} \\\hline \$ 0 & 200 & 0 \\\$ 1 & 150 & 40 \\\$ 2 & 100 & 80 \\\$ 3 & 50 & 120 \\\$ 4 & 0 & 160\end{array}$$ Refer to the table.In this market,the equilibrium price occurs where quantity demanded and quantity supplied are both

A) greater than 50 but less than 80.
B) greater than 80 but less than 100.
C) greater than 100 but less than 120.
D) greater than 120.

Question 43

If a new major oil field is discovered in Africa,the world __________ curve for oil would shift to the __________.

A) demand; left
B) demand; right
C) supply; left
D) supply; right

Question 44

If financial aid were severely reduced,what would happen to the equilibrium quantity of education supplied by educational institutions?

A) The quantity supplied would increase.
B) The quantity supplied would remain unchanged.
C) The quantity supplied would fall.
D) The change in quantity supplied would cause the quantity demanded to increase.

Question 45

In the short run,the quantity of available hotel rooms is not particularly responsive to changes in price because hotels take time to build and to destroy.This implies that the short-run supply of hotel rooms is

A) elastic.
B) inelastic.
C) in equilibrium.
D) greater than demand.

Question 46

Higher interest rates can cause the demand curve for cars to

A) shift to the right.
B) shift to the left.
C) remain unchanged.
D) reach equilibrium price.

Question 47

Refer to the figure.Which of the following is true?

A) At a price of $10, there would be neither excess demand for nor excess supply of pizza.
B) At a price of $8, there would be excess demand for pizza.
C) At a price of $5, there would be neither excess demand for nor excess supply of pizza.
D) At a price of $0.50, there would be excess supply of pizza.

Question 48

In a movement along the demand curve,the demand schedule

A) stays the same, as do prices.
B) increases, as do prices.
C) decreases, and prices decrease.
D) stays the same, and the price changes.

Question 49

An increase in oil prices may cause

A) demand to curve to the right.
B) a reduction in the quantity of oil demanded.
C) market equilibrium.
D) market price reductions.

Question 50

To determine whether a particular good is a normal good,a luxury good,or an inferior good,you would want to observe what happens to demand for the good when __________ changes.

A) supply
B) price
C) the price of raw materials
D) income

Question 51

For which pair of goods below would an increase in income have the same effect on both goods?

A) A normal good and an inferior good.
B) An inferior good and a luxury good.
C) A normal good and a luxury good.
D) A superior good and a normal good.

Question 52

$$\begin{array} { c | c | c } \text { Price } & \begin{array} { c } \text { Quantity } \\\text { Demanded }\end{array} & \begin{array} { c } \text { Quantity } \\\text { Supplied }\end{array} \\\hline \$ 0 & 200 & 0 \\\$ 1 & 150 & 40 \\\$ 2 & 100 & 80 \\\$ 3 & 50 & 120 \\\$ 4 & 0 & 160\end{array}$$ Refer to the table.In this market,the equilibrium price

A) does not exist.
B) is between $2 and $3.
C) is greater than $4.
D) is equal to exactly $2.

Question 53

Refer to the figure.In the market for medium cheese pizzas,the equilibrium price is

A) $10.
B) $8.
C) $5.
D) $0.50.

Question 54

Which of the following is probably NOT an example of a normal good?

A) Routine medical care.
B) Housing.
C) Motor vehicles.
D) Store-brand breakfast cereal.

Question 55

After Hurricane Katrina,the supply curve for oil shifted to the left,and as a result

A) gas prices remained at the equilibrium price.
B) a new equilibrium price was reached.
C) market balance was achieved.
D) market price was reached.

Question 56

Government action can cause a shift in

A) supply only.
B) demand only.
C) either supply or demand.
D) neither supply nor demand.

Question 57

When a demand curve shifts to the right,

A) demand increases, equilibrium price increases, and equilibrium quantity increases.
B) demand decreases.
C) the equilibrium price remains stable.
D) demand decreases, and equilibrium price decreases.

Question 58

A failure in the mortgage lending sector could cause

A) a demand shift to the right in the housing market.
B) a supply shift to the right in the housing market.
C) a demand shift to the left in the housing market.
D) no change in lending activity.

Question 59

When does market equilibrium change in a given market?

Question 60

In 2004,the worldwide demand curve for cement moved to the right.What does this mean?

A) At any price, the quantity demanded was lower.
B) At any price, the quantity demanded was higher.
C) At a given price, the quantity demanded was lower.
D) At a given price, the quantity demanded remained unchanged.

Question 61

What happens when a supply curve shifts right?

Question 62

What are three potential causes of market shifts in a given economy?

Question 63

What happened to the demand curve in the global cement market when China experienced a construction boom starting in 2004?

Question 64

When music downloading was introduced,what impact did that have on the demand curve for CDs?