Equilibrium

Question 1

What does a decrease in the supply for a good cause?

Answer 1

Temporary shortage of that good

Question 2

What does a decrease in the demand for a good cause?

Answer 2

Temporary surplus of that good

Question 3

What occurs at market equilibrium?

Answer 3

The quantity of a good buyers are willing to buy is the same quantity that sellers are willing to sell

Question 4

In a market economy, who makes choices about what goods and services will be produced and at what prices they will be sold?

Answer 4

Consumers & producers

Question 5

An increase in demand shifts the demand curve to the right resulting in a new equilibrium with what?

Answer 5

Higher price & higher quantity

Question 6

True or False? Only demand determines market price.

Answer 6

False. Both supply & demand determine market price

Question 7

On a graph, where is market equilibrium?

Answer 7

The point where the supply curve & demand curve intersect

Question 8

True or False? Equilibrium is a constant, unchanging point.

Answer 8

False. Equilibrium is NOT a constant, unchanging point

Question 9

What direction does a surplus put pressure on market price?

Answer 9

Downward