supply and demand continued Flashcards
17) Which one of the following correctly describes how price adjustment eliminates a surplus?
A) As the price rises, the quantity demanded decreases and the quantity supplied increases.
B) As the price rises, the quantity demanded increases and the quantity supplied decreases.
C) As the price falls, the quantity demanded decreases and the quantity supplied increases.
D) As the price falls, the quantity demanded increases and the quantity supplied decreases.
E) As the price falls, the demand for substitutes decreases, which eliminates the surplus.
D
18) Which one of the following correctly describes how price adjustment eliminates a shortage?
A) As the price rises, the quantity demanded decreases and the quantity supplied increases.
B) As the price rises, the quantity demanded increases and the quantity supplied decreases.
C) As the price falls, the quantity demanded decreases and the quantity supplied increases.
D) As the price falls, the quantity demanded increases and the quantity supplied decreases.
E) As the price falls, the quantity demanded increases and the quantity supplied increases.
A
19) If the price is above the equilibrium price, then
A) none of the good will be sold.
B) the price must rise further to reach the new market equilibrium.
C) a surplus exists.
D) a shortage exists.
E) price will not change; producers will cut back production until the market is in equilibrium.
C
20) A shortage will exist if
A) the price is above the equilibrium price.
B) the price is below the equilibrium price.
C) there are not enough producers.
D) there are not enough consumers.
E) demand decreases.
B
21) The price of a good will tend to fall if
A) there is a surplus at the current price.
B) the current price is below the equilibrium price.
C) the quantity supplied exceeds the quantity demanded at the current price.
D) both A and C are true.
E) none of the above are true.
D
22) If the market for Twinkies is in equilibrium, then
A) Twinkies must be a normal good.
B) producers would like to sell more at the current price.
C) consumers would like to buy more at the current price.
D) there is a surplus.
E) the equilibrium quantity equals the quantity demanded.
E
25) When a shortage occurs, there is a tendency for the A) price to fall. B) price to remain unchanged. C) price to rise. D) quantity demanded to increase. E) quantity supplied to decrease.
C
27) If the quantity of textbooks supplied is 10,000 per year and the quantity of textbooks demanded is 8,000 per year, there is a ________ in the market and the price will ________.
A) shortage; rise
B) shortage; fall
C) surplus; rise
D) surplus; fall
E) surplus; either rise or fall depending on whether supply increases to meet the surplus
D
28) If the market for Twinkies is in equilibrium, then
A) Twinkies must be a normal good.
B) producers would like to sell more at the current price.
C) consumers would like to buy more at the current price.
D) the quantity supplied equals the quantity demanded.
E) the supply of Twinkies will never increase and the demand for Twinkies will never decrease.
D
1) Since 1980, there has been a dramatic increase in the number of working mothers. Based on this information alone, we can predict that the market for child care services has experienced A) an increase in demand. B) a decrease in demand. C) an increase in quantity demanded. D) a decrease in quantity supplied. E) an increase in supply.
A
5) The price of a good will rise if
A) demand for the good decreases.
B) supply of the good decreases.
C) there is a surplus of the good.
D) the price of a substitute for the good decreases.
E) the good is an inferior good and income increases.
B
6) The price of a good will fall if A) there is a shortage of the good. B) if demand for the good increases. C) there is a surplus of the good. D) if the supply of the good decreases. E) if demand for the good does not change.
C
7) The price of a good will fall if A) demand for the good increases. B) supply of the good decreases. C) supply of the good increases. D) demand for the good remains constant. E) supply of the good remains constant.
C
8) Suppose we observe a rise in the price of good A and an increase in the quantity of good A bought and sold. Which one of the following is a likely explanation? A) The law of demand is violated. B) The demand for A decreased. C) The demand for A increased. D) The supply of A increased. E) The supply of A decreased.
C
9) Suppose we observe a rise in the price of good A and a decrease in the quantity of good A bought and sold. Which one of the following is a likely explanation? A) The law of supply is violated. B) The demand for A decreased. C) The demand for A increased. D) The supply of A increased. E) The supply of A decreased.
E
10) Suppose we observe a fall in the price of good A and an increase in the quantity of good A bought and sold. Which one of the following is a likely explanation? A) The law of supply is violated. B) The demand for A decreased. C) The demand for A increased. D) The supply of A increased. E) The supply of A decreased.
D
11) Suppose we observe a fall in the price of good A and a decrease in the quantity of good A bought and sold. Which one of the following is a likely explanation? A) The law of demand is violated. B) The demand for A decreased. C) The demand for A increased. D) The supply of A increased. E) The supply of A decreased.
B
12) When the demand for good A increases,
A) the equilibrium price and equilibrium quantity will increase.
B) the equilibrium price will rise but the equilibrium quantity will decrease.
C) the equilibrium price and equilibrium quantity will decrease.
D) the equilibrium price will decrease but the equilibrium quantity will increase.
E) a surplus will result.
A
13) When the supply of good A decreases,
A) the equilibrium price and the equilibrium quantity will increase.
B) the equilibrium price will increase but the equilibrium quantity will decrease.
C) the equilibrium price and the equilibrium quantity will decrease.
D) the equilibrium price will decrease but the equilibrium quantity will increase.
E) a surplus will result.
B
14) If A is an inferior good and consumer income rises, the demand for A
A) increases and the equilibrium price and the equilibrium quantity increase.
B) increases and the equilibrium price rises but the equilibrium quantity decreases.
C) decreases and the equilibrium price and the equilibrium quantity decrease.
D) decreases and the equilibrium price falls but the equilibrium quantity increases.
E) decreases and the equilibrium price rises; as a result, the equilibrium quantity decreases.
C
15) If A and B are substitutes and the price of A rises, we will observe
A) an increase in the equilibrium price and the equilibrium quantity of B.
B) a decrease in the equilibrium price and the equilibrium quantity of B.
C) an increase in the equilibrium price but a decrease in the equilibrium quantity of B.
D) a decrease in equilibrium price but an increase in the equilibrium quantity of B.
E) none of the above.
A
16) If A and B are substitutes and the cost of a factor of production used in the production of A increases, then the price of
A) B falls but the price of A rises.
B) B rises but the price of A falls.
C) A falls, and the price of B will stay unchanged.
D) A and B fall.
E) A and B rise.
E