Topic 1 Quiz

If a shortage exists in a market, then we know that the actual price is:

below the equilibrium price, and quantity demanded is greater than quantity supplied

Which of the following would cause price to increase?

a shortage of the good

Which of the following would cause price to decrease?

a surplus of the good

When the price of a good is lower than the equilibrium price:

buyers desire to purchase more than is produced

If the demand for a product decreases, then we would expect equilibrium price:

and equilibrium quantity to both decrease

Which of the following events must cause equilibrium quantity to rise?

demand and supply both increase

Equilibrium price must decrease when demand:

decreases and supply does not change, when demand does not change and supply increases, and when demand decreases and supply increases simultaneously

Equilibrium quantity must increase when demand:

increases and supply does not change, when demand does not change and supply increases, and when both demand and supply increase

Which of the following cause equilibrium price to fall?

demand decreases and supply increases

Equilibrium quantity must decrease when demand:

decreases

Supoose roses are currently selling for $40 per dozen, but the equilibrium price of roses is $30 per dozen. We would expect a:

surplus to exist and the market price of roses to decrease.

When the price of a good is higher than the equilibrium price:

sellers desire to produce and sell more than buyers wish to purchase.

If the supply of a product increases, then we would expect equilibrium price:

to decrease and equilibrium quantity to increase.

If a surplus exists in a market, then we know that the actual price is:

above the equilibrium price, and quantity supplied is greater than quantity demanded.

If, at the current price, there is a surplus of a good, then:

sellers are producing more than buyers wish to buy.

When a shortage exists in a market, sellers:

raise price, which decreases quantity demanded and increases quantity supplied until the shortage is eliminated.

The unique point at which the supply and demand curves intersect is called:

equilibrium.