Chapter 4

Question 1

As prices declined quantity demand goes………in quantity supplied goes…….

Answer 1

Up and up

Question 2

An increase in supply means that the quantity supplied rises.

Answer 2

And all prices

Question 3

A decrease in demand means that qualities demands falls.

Answer 3

At all prices

Question 4

When the market price is higher than the equilibrium price there is a what?

Answer 4

A surplus

Question 5

When the market price is lower than the equilibrium price there is a what?

Answer 5

Shortage

Question 6

True or false. At equilibriumthere may be a shortage or a surplus.

Answer 6

True

Question 7

A demand schedule can be presented as what?

Answer 7

A table and a graph

Question 8

If the equilibrium price of corn is a three dollars and the government encloses a floor of a four dollar a bushel the price of corn will go to what?

Answer 8

It will increase to four dollars

Question 9

On a graph where the curve goes from zero to the right up what does that show?

Answer 9

A supply schedule

Question 10

At equilibrium is quantity supplied is 16 quantity demanded is what?

Answer 10

16

Question 11

Is market price is above equilibrium quantity supplied is greater than quantity demanded. True or False

Answer 11

True

Question 12

As prices rise the quantity ……. rises.

Answer 12

Supplied

Question 13

If the government sets a price ceiling of $.25 for a loaf of bread, the most likely consequences would be what?

Answer 13

A shortage of bread

Question 14

At equilibrium quantity demanded ………..quantity supplied.

Answer 14

Always equals

Question 15

True or false. The demand curve slopes downward to the right and the supply curve slopes upward to the right.

Answer 15

True

Question 16

There is a shortage of quantity demanded over quantity supplied when what?

Answer 16

The market is below equilibrium price

Question 17

The market price ………..the equilibrium price.

Answer 17

Can be higher than or lower than

Question 18

The forces of demand and supply ensure that at equilibrium what?

Answer 18

That there are no shortages or surpluses.

Question 19

True or false. At equilibrium the quantity demanded is always equal to the quantity supplied.

Answer 19

True

Question 20

Which of the following is not true of equilibrium price?

All consumers can buy all they demand.

It is determined by interaction of supply and demand.

It is set by the government.

It is also in as the market clearing price.

Answer 20

It is set by the government

Question 21

When quantity supplied equals quantity demanded what?

Answer 21

The market is clear.

Question 22

If supply increases and demand remains and unchanged, equilibrium quantity will ……… and equilibrium prices will ………

Answer 22

Rise and fall