ECON Market Equilibrium
A tax on suppliers shifts the: Multiple choice question. demand curve up vertically. supply curve to the right. demand curve down vertically. D: supply curve to the left.
D: supply curve to the left.
The most common form of price floor is: Multiple choice question. A: the minimum wage. the equilibrium wage. a price support. the market wage.
A: the minimum wage.
The lowest wage that firms can legally pay employees in the labor market is the wage. (Enter one word in the blank.)
MINIMUM
The quantity traded times the tax equals the tax (one word).
REVENUE
When a shortage is eliminated: A: quantity supplied equals the quantity demanded. B: quantity supplied exceeds the quantity demanded. C: quantity supplied is less than the quantity demanded. D: the market moves away from an equilibrium where the quantity supplied equals the quantity demanded.
A: quantity supplied equals the quantity demanded.
A price ceiling is: A: the maximum legal price at which a good, service, or resource can be sold. B: the lowest historical price of a good, service, or resource. C: the minimum legal price at which a good, service, or resource can be sold. D: the lowest equilibrium price in the market.
A: the maximum legal price at which a good, service, or resource can be sold.
Which of the following will cause a decrease in market equilibrium price and an increase in equilibrium quantity? A:An increase in supply B: An increase in demand. C: A decrease in supply. D: A decrease in demand.
A:An increase in supply
Suppose the price of gasoline decreases as a result of a decrease in demand. Assuming everything else remains constant, what is one result of this change? A: Consumers benefit from lower prices. B: Producers benefit from lower prices. C: Consumers benefit because there is less available to buy. D: Producers benefit due to lower production costs.
A:Consumers benefit from lower prices. Reason: (When prices decrease because demand shifts left, or decreases and supply remains constant, consumers will benefit from being able to purchase items at a lower price.)
A characteristic of demand for a good, service, or resource other than its own market price is: A: a variation of a price change related to the supply of a good. B: a nonprice determinant of demand. C: some change in demand that is not readily observable. D: a market determinant of demand.
B: a nonprice determinant of demand.
A change in demand is: A: an increase or decrease in the quantity demanded at the market price. B: an increase or decrease in the quantity demanded at every price. C: an increase or decrease in the quantity demanded at the equilibrium price. D: a movement along the demand curve.
B: an increase or decrease in the quantity demanded at every price.
At equilibrium: A: most of those who want to buy or sell a unit of the good can do so at the market price. B: anyone who wants to buy or sell a unit of the good can do so at the market price. C: all those who want to buy or sell a unit of the good can do so at the price that is most profitable. D: anyone who wants to buy or sell a unit of the good can do so at the preferred price.
B: anyone who wants to buy or sell a unit of the good can do so at the market price.
A maximum legal price that is set below the equilibrium price is a ____________ price ceiling.
Blank 1: binding
A situation in which the quantity of output supplied is greater than the quantity of output demanded at the current market price is called _____. A: a price control B: a shortage C: a surplus D: equilibrium
C: a surplus
The direction of change in price or quantity will depend on the magnitude of the shifts in demand and supply when: A: demand changes. B: neither demand or supply changes. C: both demand and supply change. D: supply changes.
C: both demand and supply change.
When the market participants of a market that is in disequilibrium respond to rising prices, the market will return to equilibrium, resulting in: A: the onset of a shortage. B: the onset of a surplus. C: an elimination of a surplus. D: an elimination of a shortage.
D: an elimination of a shortage.
The quantity supplied of a good, service, or resource equals the quantity demanded at the ____________ quantity.
EQUILIBRIUM
When a good or service is taxed in the market: Multiple choice question. the quantity traded in the market falls. the number of sellers rises. the price falls. the quantity traded in the market rises.
A
An excise tax is a tax on: Multiple choice question. A: a good or service that depends on the units sold. all forms of income, regardless of source. a good or service that depends on the price of the good or service. institutional goods.
A: a good or service that depends on the units sold.
A binding price ceiling is: A: a maximum legal price set below the equilibrium price. B: the lowest equilibrium price in the market. C: a minimum legal price set above the equilibrium price. D: the lowest historical price of a good, service, or resource.
A: a maximum legal price set below the equilibrium price.
A price floor is: Multiple choice question. A: a minimum legal price at which a good, service, or resource can be sold. the lowest historical price of a good, service, or resource. a maximum legal price at which a good, service, or resource can be sold. the lowest equilibrium price in the market.
A: a minimum legal price at which a good, service, or resource can be sold.
In the market for labor: Multiple choice question. A: households are on the supply side, and firms are on the demand side. households are on the profit side, and firms are on the supply side. the demand and supply of labor remains constant throughout. households are on the demand side, and firms are on the supply side.
A: households are on the supply side, and firms are on the demand side.
When price ceilings are in effect: A: market participants have a strong incentive to work around the laws. B: there is an increase in the prices received by producers. C: the quantity supplied equals the quantity demanded. D: the quantity supplied exceeds the quantity demanded. E: there is a surplus of output for consumers.
A: market participants have a strong incentive to work around the laws.
When a minimum wage results in unemployment: Multiple choice question. A: people may turn to informal markets to provide their labor. unemployment will push wages down. the government has to hire the unemployed workers.
A: people may turn to informal markets to provide their labor.
A tax: Multiple choice question. increases the cost of goods sold and shifts the supply to the right. increases the cost of goods sold and shifts the supply curve to the left. decreases the cost of goods sold and shifts the supply curve to the right. decreases the cost of goods sold and shifts the supply curve to the left.
B
Which of the following statements is true? A nonbinding price ceiling will encourage sellers to sell more. B: A binding price ceiling will be lower than a nonbinding price ceiling. C: A binding price ceiling will encourage buyers to purchase less. D: A binding price ceiling will be higher than a nonbinding price ceiling.
B: A binding price ceiling will be lower than a nonbinding price ceiling.
When a shortage exists in a competitive market, the price provides incentives for: A: suppliers to lower the price of the product. B: buyers to decrease the quantity of a good or service purchased in the market. C: buyers to put efforts toward lowering the price. D: suppliers to decrease the quantity of a good or service supplied to the market.
B: buyers to decrease the quantity of a good or service purchased in the market.
When both demand and supply change, the: A: change in demand will be indeterminate. B: change in either the equilibrium price or quantity will be indeterminate. C: change in both the equilibrium price and quantity will be indeterminate. D: change in supply will be indeterminate.
B: change in either the equilibrium price or quantity will be indeterminate.
A policy designed to ensure that sellers receive a minimum price that is greater than what would be available at the market is a price ________. Multiple choice question. ceiling. B: floor. reduction. adjustment.
B: floor.
The federal minimum wage is an example of a Multiple choice question. rent control B: price floor price ceiling efficiency wage
B: price floor
Price floors are designed to make sure that: A: buyers can purchase as much of the product as they want. B: sellers receive a minimum price that is greater than what would be available at the market equilibrium. C: sellers receive a minimum price that is less than what would be available at the market equilibrium. D: buyers pay a minimum price that is less than what would be available at the market equilibrium.
B: sellers receive a minimum price that is greater than what would be available at the market equilibrium.
To pay for needed services, governments Multiple choice question. subsidize. B: tax economic activity. print money.
B: tax economic activity.
In the presence of a tax on suppliers Multiple choice question. the cost producing the good or service decreases. B: the cost producing the good or service increases. consumers are always better off. the cost producing the good or service does not change.
B: the cost producing the good or service increases.
When the price of a good increases: A: the supply curve shifts right. B: the quantity supplied rises. C: the quantity supplied falls.
B: the quantity supplied rises.
The primary reason that governments tax economic activity is: Multiple choice question. to adjust the spending power of consumers. B: to generate the revenue needed to pay for services. so that one group benefits at the expense of another group. to change the composition of what is produced.
B: to generate the revenue needed to pay for services.
An 18.4 cent tax on every gallon of gasoline sold is an example of a(n) ________ tax (one word).
Blank 1: excise
When a minimum wage results in unemployment, people may turn to ___________ markets to provide their labor.
Blank 1: informal
The _______________(one word) wage is the most common form of price floor.
Blank 1: minimum
A minimum legal price that is not set above the equilibrium price is a __________ price floor.
Blank 1: non-binding or nonbinding
A maximum legal price that is not set below the equilibrium price is a(n) ___________ price ceiling.
Blank 1: non-binding, nonbinding, or ineffective
A tax: Multiple choice question. usually does not change the cost of goods sold. increases the quantity of goods sold. increases the price of goods sold. decreases the price of goods sold.
C:
The statement "Households are on the supply side, and firms are on the demand side." is with reference to which market? Multiple choice question. Finished goods Jobs C: Labor
C: Labor
Consider the market for jobs. Which of the following statements is true? Multiple choice question. Workers are the suppliers of jobs, and firms are the demanders of jobs. Households are on the supply side, and firms are on the demand side. C: Workers are the demanders of jobs, and firms are the suppliers of jobs. Government is on the demand side, and firms are on the supply side.
C: Workers are the demanders of jobs, and firms are the suppliers of jobs.
A minimum legal price that is set above the market price is called a Multiple choice question. non-binding price floor. binding price ceiling. C: binding price floor. minimum wage
C: binding price floor.
In order for a price floor to be: Multiple choice question. effective, the price floor must be set below the equilibrium price. effective, the price floor must be equal to the equilibrium price. C: binding, the price floor must be set above the equilibrium price. non binding, the price floor must be set above the equilibrium price.
C: binding, the price floor must be set above the equilibrium price.
With a binding price floor, the market price is set ________ what would occur in a market without price controls. A: lower than B: equal to C: higher than
C: higher than
The role of government in market economies include all the following except: Multiple choice question. enforcing contracts. defining and enforcing property rights. C: identifying new markets. determining rules of commerce.
C: identifying new markets.
By changing the prices that buyers and sellers face in the market: Multiple choice question. the government stops the market operations. the government shrinks the market size. C: taxes change market outcomes. taxes encourage consumption and production.
C: taxes change market outcomes.
Consider the market for jobs. _____ are the demanders of jobs, and _____ are the suppliers of jobs. Multiple choice question. firms; government firms; workers C: workers; firms government; workers
C: workers; firms
When a shortage exists in a competitive market, the price provides incentives for: A: buyers to put efforts toward lowering the price. B: suppliers to lower the price of the product. C: suppliers to decrease the quantity of a good or service supplied to the market. D: buyers to decrease the quantity of a good or service purchased in the market.
D: buyers to decrease the quantity of a good or service purchased in the market.
A price floor will: Multiple choice question. lower prices for buyers. lower the minimum wage. decrease profits for sellers. D: change the incentives that both buyers and sellers face.
D: change the incentives that both buyers and sellers face.
A minimum legal price that is set below the market price is called a Multiple choice question. minimum wage binding price ceiling. binding price floor. D: non-binding price floor.
D: non-binding price floor.
When there is a shortage in the market, consumers tend to: A: increase the quantity consumed. B: increase the quantity supplied. C: reduce the quantity supplied. D: reduce the quantity consumed.
D: reduce the quantity consumed.
When the government imposes a new tax (or increases an existing tax), Multiple choice question. the government does not receive revenue from the tax. the amount that consumers pay decreases. government revenue decreases. D: the amount that consumers pay increases.
D: the amount that consumers pay increases
The role of government in market economies includes: Multiple select question. Determining the rules of commerce Enforcing contracts Distributing goods and services to all animals Punishing dishonest behavior Establishing new markets Defining and enforcing property rights
Determining the rules of commerce Enforcing contracts Punishing dishonest behavior Defining and enforcing property rights
A price fixed above equilibrium that changes the incentives that both buyers and sellers face is called price _________.
FLOOR
When a tax is imposed on a product, it affects both the quantity supplied and the quantity demanded. Multiple choice question. False True
T
One way to reduce the quantity demanded for cigars would be to impose a TAXBlank 1Blank 1 TAX , Correct Unavailable (one word) on cigars.
TAX
Other factors remaining constant, when the _______________ of a good increases, the quantity supplied increases.
price
When a shortage is eliminated, the market returns to a(n) ___________ where the quantity supplied equals the quantity demanded. (Use one word for the blank.)
Blank 1: equilibrium
The primary determinant of the quantity demanded by consumers is the: A: cost of production of a good or service. B: price of a good or service. C: supply of a good or service. D: characteristics of a good or service.
B: price of a good or service.
An increase in supply is shown as a: A: leftward shift of the supply curve. B: rightward shift of the supply curve. C: a change in the market. D: movement along the supply curve.
B: rightward shift of the supply curve.
The relative magnitudes of the changes in demand and supply will determine: A: the direction of change in price or quantity when either demand or supply shifts. B: the direction of change in price or quantity when both demand and supply shift. C: the magnitude of change in price or quantity when either demand or supply shifts. D: the magnitude of change in price or quantity when both demand and supply shift.
B: the direction of change in price or quantity when both demand and supply shift.
Increased scarcity and inefficiency will result when: A: consumers outnumber producers. B: the market is in disequilibrium. C: producers outnumber consumers. D: the market is in equilibrium.
B: the market is in disequilibrium.
A good will become more affordable when: A: the supply curve shifts to the left - causing the price to fall. B: the supply curve shifts to the right - causing the price to fall. C: the supply curve shifts to the right - causing the price to rise. D: the demand curve shifts to the right - causing the price to fall.
B: the supply curve shifts to the right - causing the price to fall.
Rent control is an example of a price ________.
Blank 1: ceiling
Non- price determinants are held __________ (one word) for any given supply curve.
Blank 1: constant, fixed, or unchanging
If both demand and supply change simultaneously, the effect on either price or quantity will be ____________.
Blank 1: indeterminate, unknown, or uncertain
A maximum legal price that is not set below the equilibrium price is a(n) ______________ price ceiling.
Blank 1: non-binding, nonbinding, or ineffective
When the _________ of a good changes, the quantity demanded changes.
Blank 1: price or cost
Suppliers have an incentive to increase quantity supplied when there is a __________ (one word) in a competitive market.
Blank 1: shortage
The demand for a good changes when the non-price _______________ of demand changes. (Remember - enter only one word.)
determinants
The quantity supplied of a good, service, or resource equals the quantity demanded at the _______________ quantity. (Enter one word as your answer.)
equilibrium
Non-price determinants are ___________ for any given demand curve.
Blank 1: constant, held constant, fixed, non-changing, static, stable, steady, or unchanging
Prices may be fixed as a result of: A: a decrease in the number of suppliers. B: high demand for the product. C: characteristics of a market, such as a consumer preferences. D: government intervention in the market.
D: government intervention in the market.
When the price of a good, service, or resource increases: A: the quantity demanded increases. B: the quantity supplied increases. C: the quantity supplied decreases. D: the quantity demanded does not change.
B: the quantity supplied increases.
When the supply curve shifts to the right or left: A: there is an increase in the market. B: there has been a change in the non-price determinants of supply. C: it means the quantity supplied changed. D: there is a change in demand.
B: there has been a change in the non-price determinants of supply.
When a shift of the supply curve occurs: A: the price will decrease. B: the price will increase. C: the demand curve also shifts. D: more or less is supplied at every price.
D: more or less is supplied at every price.
When a nonprice determinant of supply changes: A: there is a movement along the supply curve. B: there is a change in the quantity supplied. C: the relationship between the quantity supplied and the price changes. D: there is a shift of the demand curve.
C: the relationship between the quantity supplied and the price changes.
When a nonprice determinant of supply changes: A: there is a shift of the demand curve. B: there is a movement along the demand curve. C: the supply curve shifts left or right. D: there is a movement along the supply curve.
C: the supply curve shifts left or right.
When both demand and supply change: A: we can always determine with confidence how price and quantity will change. B: the quantity will always increase - but the price change is indeterminate. C: we can always determine with confidence how price or quantity will change - but not both. D: the price will always increase - but the quantity change is indeterminate.
C: we can always determine with confidence how price or quantity will change - but not both.
A _______________ (one word) is usually the product of price controls that do not allow markets to adjust to unforeseen events that disrupt supply.
Shortage
Suppose that at a price of $5, consumers want 50 units, and producers want to sell 75 units. This is: A: not an equilibrium, because the quantity cannot change. B: not an equilibrium, because the quantity supplied does not equal the quantity demanded. C: an equilibrium, because the quantity supplied does not equal the quantity demanded. D: not an equilibrium, because the price cannot change.
B: not an equilibrium, because the quantity supplied does not equal the quantity demanded.
The equilibrium price is indeterminate when: A: either demand or supply shifts. B: there is an increase or decrease in both demand and supply. C: there is an increase in demand and a decrease in supply. D: there is an increase in supply and a decrease in demand.
B: there is an increase or decrease in both demand and supply.
non-price determinants are held ___________ for any given demand curve. (Use one word for the blank.)
Blank 1: constant, fixed, non-changing, static, stable, steady, unchanging, or same
When a shortage occurs in a competitive market, there is an incentive for suppliers to___________ (increase/decrease) the quantity of a good or service supplied to the market. (Choose the answer from the answer options given in the brackets)
Blank 1: increase or raise
When there is a change in a non-price determinant of supply: A: the supply curve shifts and there is a movement along the demand curve. B: the quantity supplied changes and there is a shift in demand. C: the supply curve shifts and there is a no change in the quantity demanded. D: the supply curve shifts and there is a movement along the supply curve. E: the supply curve shifts and there is a change in the demand.
A: the supply curve shifts and there is a movement along the demand curve.
A change in demand is: A: an increase or decrease in the quantity demanded at the equilibrium price. B: an increase or decrease in the quantity demanded at every price. C: a movement along the demand curve. D: an increase or decrease in the quantity demanded at the market price.
B: an increase or decrease in the quantity demanded at every price.
Shortages: A: generally occur after surpluses. B: are usually the product of price controls. C: typically cause prices to fall. D: are usually indicated by high prices.
B: are usually the product of price controls.
When demand increases, equilibrium price and quantity increase. As a result, with other things remaining constant, A: producers do not benefit due to higher production costs. B: consumers benefit because more is available to buy. C: producers benefit from lower prices. D: consumers do not benefit due to lower prices.
B: consumers benefit because more is available to buy.
The non-price determinants or other factors that affect supply are: A: the same as those that influence the demand curve. B: held constant for any given supply curve. C: changing along the supply curve. D: the price and quantity supplied.
B: held constant for any given supply curve.
Suppose that in each of four successive years producers sell more of their product and at higher prices. This could be explained A: by small annual increases in supply. B: in terms of a stable supply curve and increasing demand. C: in terms of a stable demand curve and increasing supply. D: as an exception to the law of demand.
B: in terms of a stable supply curve and increasing demand.
When the market is in equilibrium, the price that consumers pay and that producers receive exactly balances the A: total benefit and marginal cost of consuming and producing a good or service. B: marginal benefit and marginal cost of consuming and producing a good or service. C: marginal benefit and total cost of consuming and producing a good or service. D: total benefit and total cost of consuming and producing a good or service.
B: marginal benefit and marginal cost of consuming and producing a good or service.
Which of the following occurs when the price of a good increases? A: A rightward shift of the supply curve of the good B: A decrease in the quantity supplied C: An increase in the quantity supplied D: A leftward shift of the demand curve for the good
C: An increase in the quantity supplied
Identify which of the following is an example of a shortage. A: Food prices fall as a blizzard is forecast. B: Snow shovel prices rise as a blizzard is forecast. C: No snow shovels are available when a blizzard is forecast. D: Snow shovels this year cost more than they did last year.
C: No snow shovels are available when a blizzard is forecast
Which of the following is true of a normal good? A: The quantity demanded rises as the price rises. B: The quantity demanded falls as the price falls. C: The quantity demanded falls as the price rises. D: The demand curve shifts to the right as the price falls.
C: The quantity demanded falls as the price rises.
Use the following table to answer the question below. (1 QD ) (2 QD) (3 PRICE) (4 QS) (5 QS) 50 40 $10 70 80 60 50 9 60 70 80 60 8 50 60 90 70 7 40 50 100 80 6 30 40 Suppose that market demand is represented by two demanders in columns (1) and (2) and market supply is represented by two suppliers in columns (4) and (5). If the price were artificially set at $6 A: the market would clear. B: a surplus of 50 units would occur. C: a shortage of 110 units would occur. D: demand would change from (2) to (1).
C: a shortage of 110 units would occur.
A market for a product reaches equilibrium when A: the actual quantity bought by buyers equals actual quantity sold by sellers. B: the price rises further after there is a surplus. C: buyers intend to buy a quantity equal to the quantity that sellers intend to sell. D: price falls further after there is a shortage.
C: buyers intend to buy a quantity equal to the quantity that sellers intend to sell.
A decrease in demand and an increase in supply will A: affect price in an indeterminate way and decrease the equilibrium quantity. B: increase price and affect the equilibrium quantity in an indeterminate way. C: decrease price and affect the equilibrium quantity in an indeterminate way. D: decrease price and increase the equilibrium quantity.
C: decrease price and affect the equilibrium quantity in an indeterminate way.
The equilibrium price decreases and the equilibrium quantity is indeterminate when: A: demand and supply both increase. B: demand increases and supply decreases. C: demand decreases and supply increases. D: either demand or supply shifts.
C: demand decreases and supply increases.
The quantity traded when the quantity supplied of a good, service, or resource equals the quantity demanded is the _____ quantity. (Enter one word answer.) A: market B: supplied C: equilibrium D: demanded
C: equilibrium
If _____ were not allowed to adjust, a shortage would persist, and the market would not return to equilibrium. (Use one word for the blank.) A: Risks B: taxes C: costs D: prices E: quantities
D: prices
A surplus occurs when: A: quantity demanded > quantity supplied. B: quantity demanded = quantity supplied. C: quantity demanded - quantity supplied > 0 D: quantity demanded < quantity supplied.
D: quantity demanded < quantity supplied.
When there is a decrease in both demand and supply: A: the equilibrium quantity and price also fall. B: the equilibrium quantity and price rise. C: the equilibrium price falls, but the change in the equilibrium quantity is indeterminate. D: the equilibrium quantity falls, but the change in the equilibrium price is indeterminate.
D: the equilibrium quantity falls, but the change in the equilibrium price is indeterminate.
The price that consumers pay and that producers receive exactly balances the marginal benefit and marginal cost of consuming and producing a good or service when: A: firms are earning profits. B: consumers are making choices. C: the market is in flux. D: the market is in equilibrium.
D: the market is in equilibrium.
When both demand and supply change simultaneously A: the change in quantity will be indeterminate. B: the change in price will be indeterminate. C: we can determine the effect on both price and quantity. D: we can determine the effect on either price or quantity - but not both.
D: we can determine the effect on either price or quantity - but not both.
Other factors remaining constant, when the _____________ of a good increases, the quantity supplied increases.
PRICE
A tax: Multiple choice question. does not change any nonprice determinant of demand of a good. is determined based on the production cost of a good. changes the characteristics of a good. reduces the number of sellers.
A
By changing the prices that buyers and sellers face in the market: Multiple choice question. taxes change market outcomes. taxes encourage consumption and production. the government shrinks the market size. the government stops the market operations.
A
The tax on a good or service that depends on the units sold - not the price of the good or service is called _____ tax. Multiple choice question. excise payroll income toll
A
The market-clearing price is the same as the ________ price.
EQUILIBRIUM
_____________(one word) results in increased scarcity and inefficiency in the production of a good or service.
Disequilibrium
When a good or service is taxed in the market: Multiple choice question. the price rises. the number of sellers rises. the quantity traded in the market rises. the quantity traded in the market does not change.
A
A nonbinding price floor is: Multiple choice question. A: a minimum legal price that is not set above the equilibrium price. a maximum legal price that is not set below the equilibrium price. the lowest equilibrium price in the market. the lowest historical price of a good, service, or resource.
A: a minimum legal price that is not set above the equilibrium price.
The quantity traded times the tax equals: Multiple choice question. the income spent by the buyers. the tax revenue from a tax. the income earned by the sellers. the sum of buying and selling.
B
The revenue collected from a tax equals: Multiple choice question. the income minus the tax. the tax times the quantity traded. the price times the quantity traded. the quantity traded times the number of buyers
B
When a good or service is taxed in the market: Multiple choice question. the number of sellers rises. the price rises. the quantity traded in the market does not change. the quantity traded in the market rises.
B
When a tax is placed on a good: Multiple choice question. the price paid by consumers falls, but the price received by producers increases. the price paid by consumers rises, but the price received by producers decreases. the price paid by consumers and producers falls. the price paid by consumers and producers rises.
B
Which of the following is a benefit from imposing a tax on a good or service? Multiple choice question. Businesses sell more goods and services to consumers. The government raises revenue to fund government activities Taxes encourage people to consume the good or service. Consumers have more goods and services to choose from.
B
Referring to the graph, if a $6 excise tax is imposed on the market for wine, what happens to the price buyers pay and the price sellers receive? Multiple choice question. The price for buyers decreases and the price for sellers decreases. The price for buyers and the price for sellers both remain the same. The price for buyers increases and the price for sellers decreases. Reason: (When a good or service is taxed, the overall price paid by consumers rises and the price received by sellers, net of the tax, falls. In this example, the price paid by consumers rises to $14, and the price received by sellers decreases to $8. Without the tax, the market price is $10.) The price for buyers increases and the price for sellers increases.
C
When the government imposes a new tax (or increases an existing tax), Multiple choice question. the amount that consumers pay decreases. the government does not receive revenue from the tax. the amount that consumers pay increases. government revenue decreases.
C
Which of the following statements is true? Multiple choice question. A nonbinding price floor is set equal to the equilibrium price, and a binding price floor is below the equilibrium price. A nonbinding price floor is set above the equilibrium price, and a binding price floor is not above the equilibrium price. C: A binding price floor is set above the equilibrium price, and a nonbinding price floor is not above the equilibrium price. A nonbinding price floor is set below the equilibrium price, and a binding price floor is equal to the equilibrium price.
C: A binding price floor is set above the equilibrium price, and a nonbinding price floor is not above the equilibrium price.
Which of the following is a benefit from imposing a tax on a good or service? Multiple choice question. Consumers have more goods and services to choose from. Taxes encourage people to consume the good or service. Businesses sell more goods and services to consumers. The government raises revenue to fund government activities
D
Which of the following would shift the supply curve for soft drinks to the left? Multiple choice question. A decrease in the price of soft-drink ingredients. An increase in the number of sellers of soft drinks. A government subsidy on the production of soft drinks. A 2 cent per ounce tax on all soft drinks.
D
A shortage occurs when: A: Qd > Qs. B: Qd = Qs. C: Qd < Qs. D: Qs - Qd > 0.
A: Qd > Qs.
The market adjusts to a new equilibrium price and quantity when: A: a nonprice determinant of supply changes. B: there is a change in the price of a good. C: new products are introduced. D: there is a change in the quantity of a good.
A: a nonprice determinant of supply changes.
The market adjusts to a new equilibrium price and quantity when: A: a nonprice determinant of supply changes. B: there is a change in the price of a good. C: there is a change in the quantity of a good. D: new products are introduced.
A: a nonprice determinant of supply changes.
A change in demand is: A: an increase or decrease in the quantity demanded at every price. B: an increase or decrease in the quantity demanded at the market price. C: a movement along the demand curve. D: an increase or decrease in the quantity demanded at the equilibrium price.
A: an increase or decrease in the quantity demanded at every price.
Surpluses and shortages: A: are denoted in units of the product itself. B: are denoted in dollars of value. C: cannot be compared because of unit differences. D: are only estimated.
A: are denoted in units of the product itself.
The change in price or quantity will be indeterminate when: A: both demand and supply change. B: supply changes. C: demand changes. D: either demand or supply changes.
A: both demand and supply change.
When the government sets the price below market equilibrium, a ____________ will result.
Shortage
When a nonprice determinant of supply changes: A :the supply curve shifts left or right. B: there is a shift of the demand curve. C: there is a movement along the supply curve. D: there is a movement along the demand curve.
A :the supply curve shifts left or right.
The nonprice determinants or other factors that affect demand are held constant for any given: A: demand curve. B: price and quantity demanded. C: supply curve. D: cost curve.
A: demand curve.
The equilibrium price increases and the equilibrium quantity is indeterminate when: A: demand increases and supply decreases. B: demand and supply both decrease. C: demand decreases and supply increases. D: either demand or supply shifts.
A: demand increases and supply decreases.
When both demand and supply shift, the direction of change in price or quantity: A: depends on the relative magnitudes of the changes in demand and supply. B: is always the same as the change in demand and supply. C: is always the opposite of the change in demand and supply. D: is always the same as the change in demand.
A: depends on the relative magnitudes of the changes in demand and supply.
The non-price determinants or other factors that affect supply are: A: held constant for any given supply curve. B: changing along the supply curve. C: the same as those that influence the demand curve. D: the price and quantity supplied.
A: held constant for any given supply curve.
Shortages cannot push the market to an equilibrium in the presence of: A: price controls. B: high prices. C: surpluses. D: profits.
A: price controls.
Picture a competitive market with the usual upward sloping supply curve and downward sloping demand curve. If the current price is creating a shortage, then market forces will cause the price to adjust and A: quantity supplied will increase B: quantity supplied will decrease. C: quantity demanded will increase. D: demand will decrease.
A: quantity supplied will increase
Other things remaining constant - an increase or decrease in the quantity supplied of a good at every price is: A: reflected by a shift of the supply curve. B: reflected by an upward or downward movement along the supply curve. C: a result of a change in consumer income. D: a result of a change in the price of the good.
A: reflected by a shift of the supply curve.
A change in a nonprice determinant of supply will: A: result in a shift of the supply curve. B: rarely occur. C: result in a movement along the supply curve. D: cause the market to fall.
A: result in a shift of the supply curve.
When a shortage exists in a competitive market, the price provides incentives for: A: suppliers to increase the quantity of a good or service supplied to the market. B: suppliers to decrease the quantity of a good or service supplied to the market. C: buyers to put efforts toward lowering the price. D: buyers to increase the quantity of a good or service purchased to the market.
A: suppliers to increase the quantity of a good or service supplied to the market.
A surplus occurs when: A: the quantity of output supplied is greater than the quantity of output demanded at the current market price. B: the quantity of output demanded is greater than the quantity of output supplied at any market price. C: the quantity of output supplied is greater than the quantity of output demanded at the base year price. D: the quantity of output demanded is greater than the quantity of output supplied at the current market price.
A: the quantity of output supplied is greater than the quantity of output demanded at the current market price.
A change in the quantity demanded at each price is: A: an unusual market event. B: related to supply changes. C: change in demand. D: a change in the quantity demanded.
C: change in demand.
We can determine how price or quantity will change, but not both, when: A: either demand or supply changes. B: demand changes. C: supply changes. D: both demand and supply change.
D: both demand and supply change.
Shortages and surpluses are represented by the: A: horizontal distance between the market price and the equilibrium price. B: vertical distance between a point on the demand curve at a particular price and a point on the supply curve at the same price. C: horizontal distance between a point on the demand curve at a particular price and a point on the supply curve at the same price. D: vertical distance between the market price and the equilibrium price.
C: horizontal distance between a point on the demand curve at a particular price and a point on the supply curve at the same price.
Answer the next question based on the following supply and demand schedules in units per week for a product. PriceQ DemandedQ Supplied $60 100 400 50 140 340 40 180 280 30 220 220 20 260 160 10 300 100 If demand increased by 100 units at each price level, and the government set a price ceiling of $40, then there will be A: a shortage. B: a surplus. C: no shortage or surplus. D: decrease in supply.
C: no shortage or surplus.
A good once unaffordable to most people can become an item that almost everyone owns when: A: the market demand is constant over time. B: the market demand increases over time. C: the market supply increases over time. D: the market supply decreases over time.
C: the market supply increases over time.
When a nonprice determinant of supply changes: A: there is a change in the quantity supplied. B: there is a shift of the demand curve. C: the relationship between the quantity supplied and the price changes. D: there is a movement along the supply curve.
C: the relationship between the quantity supplied and the price changes.
Suppose demand and supply both shift simultaneously. If we know the direction of the shifts, but not the relative magnitude of the shifts, then A: we will know the effect on both the price and the quantity. B: we will know the effect on price but not quantity. C: we will know the effect on either the price or the quantity but not both. D: we will know the effect on quantity but not price.
C: we will know the effect on either the price or the quantity but not both.
Use the following table to answer the question below. Price per Unit QuantityD per Year QuantityS $5 2000 0 10 1800 300 15 1600 600 20 1400 900 25 1200 1200 30 1000 1500 In this competitive market, the price and quantity will settle at A: $10 and 1,800 units. B: $15 and 1,600 units. C: $20 and 900 units. D: $25 and 1,200 units.
D: $25 and 1,200 units.
Which of the following is not a condition for a market to reach equilibrium? A: Consumers need information about different suppliers' locations so that they can choose the closest. B: Firms must be able to monitor inventories. C: Firms must be able to adjust their prices toward the equilibrium price. D: Consumers need information about different suppliers' costs.
D: Consumers need information about different suppliers' costs.
A nonprice determinant of demand is: A: some change in demand that is not readily observable. B: a variation of a price change related to the supply of a good. C: a characteristic of demand for a good, service, or resource other than its own market quantity. D: a characteristic of demand for a good, service, or resource other than its own market price.
D: a characteristic of demand for a good, service, or resource other than its own market price.
The market adjusts to a new equilibrium price and quantity when: A: there is a change in the price of a good. B: new products are introduced. C: there is a change in the quantity of a good. D: a nonprice determinant of supply changes.
D: a nonprice determinant of supply changes.
The equilibrium quantity increases and the equilibrium price is indeterminate when: A: demand decreases and supply increases. B: demand increases and supply decreases. C: either demand or supply shifts. D: demand and supply both increase
D: demand and supply both increase
If the quantity supplied equals the quantity demanded: A: The market quantity cannot change. B: The market price cannot change. C: equilibrium will stay the same if there are only market forces acting on it. D: equilibrium will stay the same if all else is equal.
D: equilibrium will stay the same if all else is equal.
If a market does not have price flexibility (such as in the presence of price controls), price cannot _______ when there is a surplus and cannot ________ when there is a shortage. A: rise; fall B: fall; fall C: rise; rise D: fall; rise
D: fall; rise
The non-price determinants or other factors that affect demand are: A: the price and quantity demanded. B: the same as those that influence the supply curve. C: changing along the demand curve. D: held constant for any given demand curve.
D: held constant for any given demand curve.
When the market is in equilibrium, the price that consumers pay and that producers receive exactly balances the A: total benefit and marginal cost of consuming and producing a good or service. B: total benefit and total cost of consuming and producing a good or service. C: marginal benefit and total cost of consuming and producing a good or service. D: marginal benefit and marginal cost of consuming and producing a good or service.
D: marginal benefit and marginal cost of consuming and producing a good or service.
A shortage persists when: A: price is not allowed to adjust downward. B: supply is greater than demand. C: quantity supplied exceeds quantity demanded. D: price is not allowed to adjust upward.
D: price is not allowed to adjust upward.
