Deck 4: Supply and Demand

Question 1

The market price ____________ the equilibrium price.

A)can be higher than, but never lower than
B)can be lower than, but never higher than
C)can be higher than, or lower than
D)is always equal to

Answer 1

can be higher than, or lower than

Question 2

As price declines, quantity demanded goes _______ and quantity supplied goes ________.

A)up, up
B)down, down
C)up, down
D)down, up

Answer 2

up, down

Question 3

At equilibrium, each of these is true except

A)quantity demanded equals quantity supplied.
B)the price has no tendency to change.
C)market price equals equilibrium price.
D)there may be a shortage or a surplus.

Answer 3

there may be a shortage or a surplus.

Question 4

If market price is above equilibrium price,

A)quantity demanded is greater than quantity supplied.
B)quantity supplied is greater than quantity demanded.
C)quantity supplied is equal to quantity demanded.

Question 5

If the government set a price ceiling of 25 cents for a loaf of bread, the most likely consequence would be

A)a surplus of bread.
B)no one would go hungry.
C)most Americans would put on weight.
D)a shortage of bread.

Question 6

The forces of demand and supply ensure that at equilibrium

A)there are no shortages or surpluses.
B)there are no shortages, but there may be surpluses.
C)there are no surpluses, but there may be shortages.
D)there may be shortages or surpluses.

Question 7

When the market price is lower than the equilibrium price, there is

A)a surplus.
B)a shortage.
C)both a shortage and a surplus.
D)neither a shortage nor a surplus.

Question 8

When the market price is higher than the equilibrium price, there is

A)a surplus.
B)a shortage.
C)both a shortage and a surplus.
D)neither a shortage nor a surplus.

Question 9

In the graph shown above, at a price of $3.00

A)there is a shortage.
B)there is a surplus.
C)quantity supplied is greater than quantity demanded.
D)None of these choices are correct.

Question 10

If the market price is below equilibrium price,

A)quantity demanded is less than quantity supplied.
B)quantity demanded is equal to quantity supplied.
C)quantity demanded is greater than quantity supplied.

Question 11

A decrease in demand means that quantity demanded falls

A)at least one price.
B)at a few prices.
C)at most prices.
D)at all prices.

Question 12

As price rises, the quantity ______________ rises.

A)demanded
B)supplied
C)demanded and supplied

Question 13

In the graph shown above, if market price were $6, there would be

A)a surplus.
B)a shortage.
C)a surplus and a shortage.
D)neither a surplus nor a shortage.

Question 14

If the equilibrium price of corn is $3 a bushel and the government imposes a floor of $4 a bushel, the price of corn will _______________________.

A)increase to $4
B)remain at $3
C)rise to about $3.50
D)be impossible to determine

Question 15

If market price is equal to equilibrium price

A)there is a surplus.
B)there is a shortage.
C)there is neither a surplus nor a shortage.

Question 16

If supply increases and demand remains unchanged, equilibrium quantity will _______ and equilibrium price will ______________.

A)rise, rise
B)fall, fall
C)fall, rise
D)rise, fall

Question 17

A demand schedule can be presented

A)only as a table.
B)only as a graph.
C)as a table and a graph.
D)as neither a table or a graph.

Question 18

At equilibrium, if quantity supplied is 16, quantity demanded

A)is less than 16.
B)is 16.
C)is more than 16.
D)cannot be found without more information.

Question 19

An increase in supply means that quantity supplied rises

A)at least one price.
B)at a few prices.
C)at most prices.
D)at all prices.

Question 20

In the graph shown above at a price of $4.50

A)there is a shortage.
B)there is a surplus.
C)there is a both a shortage and a surplus.
D)there is neither a shortage nor a surplus.

Question 21

The law of supply

A)states that price and quantity supplied are inversely related.
B)states that price and quantity supplied are directly related.
C)is identical to the law of demand.
D)None of these choices are correct.

Question 22

The demand curve slopes

A)upward to the right.
B)upward to the left.
C)downward to the right.
D)downward to the left.

Question 23

If demand rises and supply remains the same, equilibrium price will _____ and equilibrium quantity will _____.

A)rise, rise
B)fall, fall
C)rise, fall
D)fall, rise

Question 24

There is a surplus of quantity supplied over quantity demanded when

A)market price is above equilibrium price.
B)market price equals equilibrium price.
C)market price is below equilibrium price.

Question 25

As price declines, quantity supplied

A)rises.
B)falls.
C)remains the same.

Question 26

A supply schedule may be depicted

A)only by a table.
B)only by a graph.
C)by both a table and a graph.
D)by neither a table nor a graph.

Question 27

An increase in equilibrium quantity would result from

A)a decrease in supply with no change in demand.
B)a decrease in supply and a decrease in demand.
C)an increase in supply with no change in demand.
D)None of these choices are correct.

Question 28

Statement I: The demand curve slopes downward to the right. Statement II: The supply curve slopes upward to the right.

A)Statement I is true and Statement II is false.
B)Statement II is true and Statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 29

When demand falls and supply remains the same, equilibrium price _______ and equilibrium quantity ________.

A)falls, falls
B)rises, rises
C)falls, rises
D)rises, falls

Question 30

Each of these is true at equilibrium except that

A)quantity demanded is equal to quantity supplied.
B)the market is said to clear, there is not surplus or shortage.
C)the buyers can buy as much as they want at the market price.
D)the sellers can sell as much as they want at the market price.
E)All of these statements are true at equilibrium.

Question 31

When supply falls and demand remains the same, equilibrium price _____ and equilibrium quantity ________.

A)rises, rises
B)falls, falls
C)falls, rises
D)rises, falls

Question 32

There is a shortage of quantity demanded over quantity supplied when

A)market price is above equilibrium price.
B)market price equals equilibrium price.
C)market price is below equilibrium price.

Question 33

If the government set a price ceiling of 50 cents for a gallon of gasoline, the most likely consequence would be

A)a surplus of gasoline.
B)the demand for automobiles fall.
C)shipping costs rise.
D)a shortage of gasoline.

Question 34

In general demand curves slope _____ and supply curves slope _____.

A)downward to the right, downward to the right
B)upward to the right, upward to the right
C)downward to the right, upward to the right
D)upward to the right, downward to the right

Question 35

When the market price is above equilibrium price, the market price will be driven

A)up by buyers.
B)up by sellers.
C)down by buyers.
D)down by sellers.

Question 36

As price rises, quantity demanded

A)rises.
B)falls.
C)remains the same.

Question 37

In a market where the forces of demand and supply operate without government intervention, the market price will

A)always be the equilibrium price.
B)generally stay above the equilibrium price.
C)generally stay below the equilibrium price.
D)tend toward the equilibrium price.

Question 38

If market price is below equilibrium price,

A)equilibrium price will rise.
B)equilibrium price will fall.
C)market price will rise.
D)market price will fall.

Question 39

At equilibrium

A)quantity supplied is equal to quantity demanded.
B)quantity demanded is greater than quantity supplied.
C)quantity supplied is greater than quantity demanded.

Question 40

The supply curve slopes

A)upward to the right.
B)upward to the left.
C)downward to the right.
D)downward to the left.

Question 41

If quantity demanded is greater than quantity supplied

A)the price will fall.
B)the price will rise.
C)the market is cleared.
D)the price is at equilibrium.

Question 42

When the market price of a good is below its equilibrium price, competition among

A)buyers will push the price up.
B)buyers will push the price down.
C)sellers will push the price up.
D)sellers will push the price down.

Question 43

When supply increases

A)demand decreases.
B)price increases because excess supply develops at the original price.
C)price decreases because a less supply is available at the original price.
D)price decreases because a excess supply at the original price.

Question 44

Which of the following is not true of equilibrium price?

A)All consumers can buy all they demand.
B)It is determined by the interaction of supply and demand.
C)It is set by the government.
D)It is also known as the market-clearing price.

Question 45

Which situation below would represent a surplus in the fertilizer market?

A)Quantity demanded is 1.2 million; quantity supplied is 1.1 million.
B)Market price $2.00 per bag; equilibrium price $2.25 per bag.
C)Market price $2.50 per bag; equilibrium price $2.00.
D)Quantity supplied this year is 25% greater than quantity supplied last year.

Question 46

If the demand for mushrooms increases while the supply remains unchanged, this will result in

A)a shortage of mushrooms as the market price remains unchanged.
B)an increase in the quantity of mushrooms sold and an increase in their price.
C)an increase in the quantity of mushrooms sold but no change in price.
D)a decrease in the quantity of mushrooms sold and an increase in their price.

Question 47

Black markets emerge during times of

A)price floors.
B)price ceilings.
C)both price floors and price ceilings.
D)neither price floors nor price ceilings.

Question 48

When a price floor that has an impact is imposed, the quantity

A)demanded will decrease and quantity supplied will increase.
B)supplied will decrease and quantity demanded will increase.
C)demanded will decrease and quantity supplied will not change.
D)supplied will decrease and quantity demanded will not change.

Question 49

For there to be demand for a good, people must

A)want the good more than they want other goods.
B)know the prices of all other goods.
C)feel there are few substitutes for the good.
D)need the good.
E)be willing and able to buy the good at the market price.

Question 50

When the supply of a good increases and the demand stays the same

A)the price of the good will rise.
B)the price of the good will fall and quantity will not change.
C)the price of the good will remain the same.
D)the price of the good will fall and quantity will rise.

Question 51

An increase in demand occurs when

A)quantity demanded is greater than quantity supplied.
B)quantity supplied is greater that quantity demanded.
C)the demand curve shifts upward and to the right.
D)there is a leftward shift in the demand curve.

Question 52

According to the law of demand, the

A)quantity demanded of a good does not vary with price.
B)quantity demanded of a good varies directly with price.
C)quantity demanded of a good is negatively related to its price.
D)quantity demanded depends on the quantity supplied.

Question 53

When a market operates so that there are no shortages and no surpluses, then the market is

A)free.
B)in equilibrium.
C)in disequilibrium.
D)subject to non-market intervention.

Question 54

When the demand for a product decreases but the supply of the product remains unchanged,

A)the price of the product will rise and quantity will decrease.
B)the price of the product will be unaffected.
C)the price of the product will fall and quantity will remain the same.
D)the price of the product will fall and the quantity will fall.

Question 55

Shortages are associated with price _______; surpluses are associated with price _______.

A)floors; ceilings
B)ceilings; floors
C)equilibrium; equilibrium
D)None of these choices are correct.

Question 56

When quantity supplied equals quantity demanded,

A)there is disequilibrium.
B)the market is cleared.
C)there is excess quantity demanded.
D)there is excess quantity supplied.

Question 57

The demand curve shows the relationship between

A)the demand and supply schedules.
B)demand and supply equilibrium.
C)price and quantity demanded.
D)None of these choices are correct.

Question 58

Which statement is true?

A)The quantity demanded is determined by the quantity supplied.
B)The quantity supplied is determined by the quantity demanded.
C)The quantity demanded is determined by sellers and the quantity supplied is determined by buyers.
D)None of these statements are true.

Question 59

When a price ceiling that has an impact is imposed, it has the effect of

A)decreasing quantity supplied and increasing quantity demanded.
B)decreasing both quantity supplied and quantity demanded.
C)increasing quantity supplied and decreasing quantity demanded.
D)increasing both quantity supplied and quantity demanded.

Question 60

Demand is defined as

A)the quantity people would buy at a given price.
B)the quantity needed by an individual during a given time.
C)the amount of a good actually purchased during a given time.
D)the quantities that buyers will purchase at different prices.

Question 61

During World War II, there was an extensive black market for tires in the United States. The most likely explanation for the existence of the black market was that

A)the price of tires was artificially held down by price controls.
B)the price of tires was artificially increased by price controls.
C)tires were one of the few goods not subject to price controls.
D)gasoline rationing greatly restricted civilian driving.

Question 62

When there is a price floor there will be

A)a shortage.
B)a surplus.
C)either a shortage or a surplus.
D)neither a shortage nor a surplus.

Question 63

If a price ceiling is set above the equilibrium price, then

A)prices will fall as soon as the ceiling price is abolished.
B)prices will remain the same (not rise) when the price ceiling is lifted.
C)equilibrium price and ceiling prices are two totally different concepts and hence do not affect each other.
D)prices will begin to rise rapidly when the price ceiling is lifted.

Question 64

When the supply of 35 mm cameras increases, the new market equilibrium as compared to the old equilibrium will have

A)a surplus of cameras.
B)no change in equilibrium price and a higher equilibrium quantity.
C)a higher equilibrium quantity and a lower equilibrium price.
D)a higher equilibrium quantity and a higher equilibrium price.

Question 65

Which statement is true?

A)Rent control is a price floor.
B)A usury law is a price floor.
C)The minimum wage law is a price floor.
D)None of these statements are true.

Question 66

If the equilibrium price of an hour with a personal trainer is $45 and the market price is currently $55, then there is

A)a surplus of personal trainers
B)a shortage of personal trainers
C)equilibrium

Question 67

When a price floor that has an impact is removed, which of the following statements is correct?

A)Price of the good increases.
B)Quantity supplied for that good decreases.
C)Demand for that good increases.
D)None of these choices are correct.

Question 68

When a price ceiling which had been set below equilibrium price is removed, what happens next?

A)Quantity supplied rises
B)Quantity demanded rises
C)Supply rises
D)Demand rises
E)Price falls

Question 69

Which of the following government programs will create a shortage?

A)Support prices.
B)Ceiling prices.
C)Sales tax.
D)None of these choices will create a shortage.

Question 70

At equilibrium, quantity demanded is _____ equal to quantity supplied.

A)always
B)usually
C)sometimes
D)never

Question 71

Gas lines were the result of

A)price ceilings.
B)price floors.
C)overproduction.

Question 72

A increase in the supply of loanable funds will ___________ interest rates.

A)raise
B)lower
C)not effect

Question 73

"The higher the price of a good or service, the greater the quantity that people are willing to sell" is

A)the law of demand
B)the law of supply
C)neither the law of demand or the law of supply

Question 74

If the government legislates a price ceiling that is above the equilibrium price

A)a shortage will develop.
B)some non-price method of rationing will develop.
C)market price and quantity sold will be unaffected.
D)a surplus will develop.

Question 75

If the equilibrium price of lettuce is $.80 per head and the government imposes a price floor of $.70 per head, the price of lettuce will

A)decrease to $.70.
B)remain at $.80.
C)decrease to $.75.
D)be impossible to determine.

Question 76

The price of $10 in the graph above represents

A)a price floor.
B)a price ceiling.
C)either a price floor or a price ceiling.
D)neither a price floor nor a price ceiling.

Question 77

Without government involvement, wages and interest rates are set by _______________.

A)price floors
B)supply and demand
C)price ceilings
D)None of these choices are correct

Question 78

Rent controls tend to __________ the supply of housing and the ________ the level of rents paid.

A)raise, raise
B)lower, lower
C)raise, lower
D)lower, raise

Question 79

When there is a price ceiling there will be

A)a shortage.
B)a surplus.
C)either a shortage or a surplus.
D)neither a shortage nor a surplus.

Question 80

The price of $4 in the graph above represents

A)a price floor.
B)a price ceiling.
C)either a price floor or a price ceiling.
D)neither a price floor nor a price ceiling.