Chapter 4: Equilibrium: Where Supply Meets Demand

Use the table to answer the question. What is the equilibrium price in this market?

$9

Which of the following five scenarios illustrate markets in action? (i) You rent a book at the university bookstore. (ii) You bargain at a street stall. (iii) You mow your own lawn. (iv) You get a manicure at a nail salon. (v) You grow your own vegetables and consume them yourself.

(i), (ii), and (iv)

Graphically, shortages will always occur:

At prices below the equilibrium price

Suppose that you have a pumpkin stall at a farmer's market, and the Halloween season arrives. You know that your customers will want to buy many pumpkins to decorate their houses and make pumpkin pies. Which of the following is a likely result of this scenario?

You can charge a higher price per pumpkin

The United Kingdom plans to end the use of gas-powered and diesel-powered cars by the year 2040. At the same time, car manufacturers, such as General Motors and Nissan, are increasing the number of electric car models they produce. Based on this information, which of the following statements is/are correct? (i) If the supply of new electric cars is greater than the demand for new electric cars, then the price of electric cars will fall in the future.(ii) The demand for gasoline will fall in the future. (iii) The demand for electricity will rise in the future. (iv) The demand for diesel will rise in the future.

(i), (ii), and (iii)

Use the table to answer the question. What is the equilibrium quantity in this market?

300 units

A seller at a farmer's market wants $10 for a bag of 10 apples. You think his price is too high, so you counter with an offer of $6 for the bag. The seller then offers you a much smaller bag of five apples for $6. You bargain again, and the seller lets you buy the 10 apples for $8. This scenario is an example of:

A market in action

An equilibrium price is:

Determined by the intersection of the demand and supply curves

As a result of technological innovation, automated water pumps are being installed on the farms of Kenyan tomato farmers. As a result of the increased use of automated water pumps, the equilibrium price of tomatoes will:

Fall, due to a rise in supply

When there is a shortage of highly skilled workers in a particular region:

Highly skilled workers can negotiate higher salaries

Graphically, the equilibrium quantity can be identified as the:

Quantity corresponding to the intersection of the demand and supply curves

A shortage occurs when:

Quantity demanded exceeds quantity supplied

(Figure: Shift in Supply 1) Use the figure to answer the question. Which of the following events would lead to a shift of the supply curve from Old supply to New supply?

Technological advance in production techniques

When there is a shortage of highly skilled workers in a particular region, the:

The demand for skills education increases

You eat M&Ms every day. When you go to the store to buy some, you find that M&Ms are more expensive than they were last month. Which of the following could explain why M&Ms are more expensive?

The supply of cacao beans, used to produce chocolate, has fallen around the world

You're shopping online, and you place an item in your virtual cart. Two days later, you return to the virtual cart to check out and find that the item is now more expensive. Assuming that the market is competitive, what could explain the price increase?

There is a shortage of the product

If a store runs a sale on a product to clear out its stock, we can conclude that:

There was a surplus of the product in the store

An equilibrium in a market occurs:

When the quantity supplied equals the quantity demanded