MRU 4.2: Exploring Equilibrium
Q2: What happens at any price other than the equilibrium price? - Waste is eliminated until equilibrium is achieved. - Forces are put into play that move the price toward the equilibrium price. - Quantity decreases until it is equal to the equilibrium quantity. - There are no unexploited gains from trade.
A: Forces are put into play that move the price toward the equilibrium price.
Q8: Which of the following is NOT true about the free market equilibrium? - There are opportunities for further gains from trade between buyers and sellers. - There is no waste. - Goods are sold by the sellers with the lowest costs. - Goods are purchased by the buyers with the highest willingness to pay.
A: There are opportunities for further gains from trade between buyers and sellers.
Q5: In a market equilibrium, what differentiates suppliers who actually sell a good from suppliers who do NOT sell a good? - The suppliers who sell value the good more than the sellers who don't sell. - The suppliers who sell are located further up the supply curve than the sellers who don't sell. - The suppliers who sell have lower costs than the sellers who don't sell. - The suppliers who sell create waste; the sellers who don't leave unexploited gains from trade.
A: The suppliers who sell have lower costs than the sellers who don't sell.
Q7: At quantities lower than the equilibrium quantity, which of the following is true? - There is waste because buyers are willing to pay more than sellers require for another unit. - There are unexploited gains from trade because sellers require more than buyers are willing to pay for another unit. - There are unexploited gains from trade because buyers are willing to pay more than sellers require for another unit. - There is waste because sellers require more than buyers are willing to pay for another unit.
A: There are unexploited gains from trade because buyers are willing to pay more than sellers require for another unit.
Q4: If there is no waste and all potential gains from trade have been exploited, then a market must: - be at a quantity below the equilibrium quantity. - not be a free market. - be in equilibrium. - be at a quantity above the equilibrium quantity.
A: be in equilibrium.
Q6: The equilibrium price in a market is the price at which: - quantity demanded equals quantity supplied. - consumer surplus equals producer surplus. - the exploited gains from trade are minimized. - market quantity is maximized.
A: quantity demanded equals quantity supplied.
Q9: The market equilibrium separates the demand curve into two parts: _______ and _______. - the buyers; the non-buyers - the buyers; the sellers - the buyers with consumer surplus; the buyers without consumer - surplus - the wasteful buyers; the non-wasteful buyers
A: the buyers; the non-buyers
Q3: A free market maximizes: - the sum of producer and consumer surplus. - quantity demanded and quantity supplied. - waste. - the market price.
A: the sum of producer and consumer surplus.
Q10: When the price at which sellers are willing to sell another unit exceeds the price at which buyers are willing to buy another unit, there must be _______, and the quantity is too _______. - unexploited gains from trade; high - unexploited gains from trade; low - waste; low - waste; high
A: waste; high
Q1: Economists believe that in free markets, potential gains from trade: - will eventually be found by buyers and sellers in a market. - often go unexploited because of a lack of incentives. - are a sign that a market is in equilibrium. - sometimes lead to waste.
A: will eventually be found by buyers and sellers in a market.
