Chapter 4: Equilibrium: Where Supply Meets Demand

d) technological advance in production techniques

(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? a) a natural disaster that causes a shutdown of production b) increased taxation of raw materials used by producers c) a decrease in the size of the market d) technological advance in production techniques

b) a market in action.

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) a centrally planned market. b) a market in action. c) a shortage. d) perfect competition.

d) quantity demanded exceeds quantity supplied.

A shortage occurs when: a) when there is insufficient demand. b) quantity supplied exceeds quantity demanded. c) there is excess production. d) quantity demanded exceeds quantity supplied.

b) when the quantity supplied equals the quantity demanded.

An equilibrium in a market occurs: a) at the halfway point on a demand curve. b) when the quantity supplied equals the quantity demanded. c) when suppliers have sold all the goods and services that they have produced. d) at the halfway point on the price axis.

b) determined by the intersection of the demand and supply curves.

An equilibrium price is: a) the price that prevails when quantity supplied is less than quantity demanded. b) determined by the intersection of the demand and supply curves. c) the price that prevails when there is a shortage. d) the price that occurs when there is a surplus.

b) fall, due to a rise in supply.

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: a) rise, due to a fall in supply. b) fall, due to a rise in supply. c) fall, due to a fall in demand. d) rise, due to a rise in demand.

b) quantity corresponding to the intersection of the demand and supply curves.

Graphically, the equilibrium quantity can be identified as the: a) quantity corresponding to the intersection of the demand curve and the price axis. b) quantity corresponding to the intersection of the demand and supply curves. c) maximum quantity that sellers are willing to sell. d) maximum quantity that buyers are willing to buy.

c) at prices below the equilibrium price.

Graphically, shortages will always occur: a) at the equilibrium price. b) at prices above the equilibrium price. c) at prices below the equilibrium price. d) when the quantity supplied exceeds the quantity demanded.

b) You can charge a higher price per pumpkin.

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? a) You will wind up with many unsold pumpkins. b) You can charge a higher price per pumpkin. c) You will take fewer pumpkins to the market to sell. d) You will be able to sell only the highest-quality pumpkins.

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

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.

d) $9

Use the table to answer the question. What is the equilibrium price in this market? a) $7 b) $11 c) $3 d) $9

b) 300 units

Use the table to answer the question. What is the equilibrium quantity in this market? a) 100 units b) 300 units c) 330 units d) 240 units

c) highly skilled workers can negotiate higher salaries.

When there is a shortage of highly skilled workers in a particular region: a) unemployment rises among highly skilled workers. b) there is a corresponding surplus of low-skilled workers in the region. c) highly skilled workers can negotiate higher salaries. d) the incomes of highly skilled workers fall.

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

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? a) The supply of cacao beans, used to produce chocolate, has fallen around the world. b) A new robot has been installed at the Mars chocolate company that reduces the time needed to produce M&Ms by half. c) A new study finds that the benefits of eating chocolate are not as great as previously thought. d) Consumers are now purchasing fewer M&Ms compared to other types of chocolates.

a) There is a shortage of the item.

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? a) There is a shortage of the item. b) There is a surplus of the item. c) There is decreased demand for the item. d) New sellers are offering the same product.