Equilibrium

When the government sets the price below market equilibrium, a will _______ result.

Shortage

A ________ is usually the product of price controls that do not allow markets to adjust to unforeseen events that disrupt supply.

Shortage, Surplus, shortage, or surplus

A shortage is sometimes called excess demand excess supply excess price control excess production

excess demand

A surplus is sometimes called: excess supply. excess price control. excess demand. excess consumption.

excess supply.

An $1.01 tax on every pack of cigarettes sold is an example of a(n) tax ________ .

excise

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 ________. ceiling. reduction. adjustment. floor.

floor

A price fixed above equilibrium that changes the incentives that both buyers and sellers face is called price _______ .

floor

Incentives faced by both buyers and sellers change in the face of a price _____ .

floor

The non-price determinants or other factors that affect demand are: the price and quantity demanded. changing along the demand curve. held constant for any given demand curve. the same as those that influence the supply curve.

held constant for any given demand curve.

Which of the following statements is true? A binding price ceiling will be higher than a nonbinding price ceiling. A nonbinding price ceiling will encourage sellers to sell more. A binding price ceiling will encourage buyers to purchase less. A binding price ceiling will be lower than a nonbinding price ceiling.

A binding price ceiling will be lower than a nonbinding price ceiling.

The role of government in market economies includes: Enforcing contracts Punishing dishonest behavior Determining the rules of commerce Distributing goods and services to all animals Establishing new markets Defining and enforcing property rights

Enforcing contracts Punishing dishonest behavior Determining the rules of commerce Defining and enforcing property rights

Identify which of the following is an example of a shortage. Snow shovel prices rise as a blizzard is forecast. No snow shovels are available when a blizzard is forecast. Snow shovels this year cost more than they did last year. Food prices rise as a blizzard is forecast.

No snow shovels are available when a blizzard is forecast.

Which of the following is not true of equilibrium? Price and quantity will never change. Changes in the determinants of demand change the equilibrium price. Adjustments by buyers and sellers move the market toward equilibrium. Changes in the determinants of supply change the equilibrium price.

Price and quantity will never change.

Which of the following is a benefit from imposing a tax on a good or service? Consumers have more goods and services to choose from. 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.

The government raises revenue to fund government activities

Which of the following occurs when the price of a good increases? There is a decrease in the quantity supplied. There is an increase in the quantity supplied. There is a rightward shift of the supply curve of the good. There is a leftward shift of the demand curve for the good.

There is an increase in the quantity supplied.

The federal minimum wage is an example of a rent control price ceiling efficiency wage price floor

[price floor

A nonprice determinant of demand is: a variation of a price change related to the supply of a good. some change in demand that is not readily observable. a characteristic of demand for a good, service, or resource other than its own market price. a characteristic of demand for a good, service, or resource other than its own market quantity.

a characteristic of demand for a good, service, or resource other than its own market price.

A nonprice determinant of demand is: some change in demand that is not readily observable. a characteristic of demand for a good, service, or resource other than its own market quantity. a variation of a price change related to the supply of a good. a characteristic of demand for a good, service, or resource other than its own market price.

a characteristic of demand for a good, service, or resource other than its own market price.

An excise tax is a tax on: a good or service that depends on the units sold. all forms of income, regardless of source. institutional goods. a good or service that depends on the price of the good or service.

a good or service that depends on the units sold.

A price floor is: a minimum legal price at which a good, service, or resource can be sold. the lowest equilibrium price in the market. the lowest historical price of a good, service, or resource. a maximum legal price at which a good, service, or resource can be sold.

a minimum legal price at which a good, service, or resource can be sold.

A nonbinding price floor is: the lowest equilibrium price in the market. a minimum legal price that is not set above the equilibrium price. the lowest historical price of a good, service, or resource. a maximum legal price that is not set below the equilibrium price.

a minimum legal price that is not set above the equilibrium price.

The market adjusts to a new equilibrium price and quantity when: a non-price determinant of supply changes. there is a change in the price of a good. the market expands. new products are introduced.

a non-price determinant of supply changes.

A characteristic of demand for a good, service, or resource other than its own market price is: a variation of a price change related to the supply of a good. a market determinant of demand. some change in demand that is not readily observable. a nonprice determinant of demand.

a nonprice determinant of demand.

A characteristic of demand for a good, service, or resource other than its own market price is: some change in demand that is not readily observable. a nonprice determinant of demand. a variation of a price change related to the supply of a good. a market determinant of demand.

a nonprice determinant of demand.

A decrease in supply is: a shift to the left. a shift to the right. a movement up along the supply curve. a movement down along the supply curve.

a shift to the left.

A change in supply is: an increase or decrease in the quantity supplied at the equilibrium price. an increase or decrease in the quantity supplied at the market price. a movement along the supply curve. an increase or decrease in the quantity supplied at every price.

an increase or decrease in the quantity supplied at every price.

A change in supply is: an increase or decrease in the quantity supplied at the market price. an increase or decrease in the quantity supplied at every price. a movement along the supply curve. an increase or decrease in the quantity supplied at the equilibrium price.

an increase or decrease in the quantity supplied at every price.

A minimum legal price that is set above the market price is called a minimum wage binding price floor. binding price ceiling. non-binding price floor.

binding price floor.

The change in price or quantity will be indeterminate when: either demand or supply changes. supply changes. demand changes. both demand and supply change.

both demand and supply change.

The direction of change in price or quantity will depend on the magnitude of the shifts in demand and supply when: demand changes. neither demand or supply changes. supply changes. both demand and supply change.

both demand and supply change.

We can determine how price or quantity will change, but not both, when: both demand and supply change. either demand or supply changes. supply changes. demand changes.

both demand and supply change.

A maximum legal price at which a good, service, or resource can be sold is called a price _____ .

ceiling

When both demand and supply change, the: change in both the equilibrium price and quantity will be indeterminate. change in either the equilibrium price or quantity will be indeterminate. change in demand will be indeterminate. change in supply will be indeterminate.

change in either the equilibrium price or quantity will be indeterminate.

Non-price determinants are held _______ for any given supply curve

constant

The nonprice determinants or other factors that affect demand are held constant for any given: cost curve. price and quantity demanded. supply curve. demand curve.

demand curve.

The nonprice determinants or other factors that affect demand are held constant for any given: demand curve. supply curve. cost curve. price and quantity demanded.

demand curve.

The market adjusts to a new equilibrium price and quantity when a non-price ______ of supply changes.

determinant

The demand for a good changes when the non-price _______ of demand changes.

determinant, factor, determinants, or factors

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.)

equilibrium

The non-price determinants or other factors that affect demand are: the price and quantity demanded. the same as those that influence the supply curve. changing along the demand curve. held constant for any given demand curve.

held constant for any given demand curve.

The non-price determinants or other factors that affect supply are: the same as those that influence the demand curve. held constant for any given supply curve. the price and quantity supplied. changing along the supply curve.

held constant for any given supply curve.

With a binding price floor, the market price is set ________ what would occur in a market without price controls. lower than equal to higher than

higher than

Shortages and surpluses are represented by the: vertical distance between the market price and the equilibrium price. vertical distance between the quantity demanded and the quantity supplied. horizontal distance between the quantity demanded and the quantity supplied. horizontal distance between the market price and the equilibrium price.

horizontal distance between the quantity demanded and the quantity supplied.

The role of government in market economies include all the following except: enforcing contracts. defining and enforcing property rights. determining rules of commerce. identifying new markets.

identifying new markets.

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.

increase

A tax: 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. increases the cost of goods sold and shifts the supply curve to the left. 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.

If both demand and supply change simultaneously, the effect on either price or quantity will be _____.

indeterminate

of both demand and supply change simultaneously, the effect on either price or quantity will be ______.

indeterminate

When the market is in equilibrium, the price that consumers pay and that producers receive exactly balances the _________ benefit and marginal cost of consuming and producing a good or service.

marginal

When a shift of the supply curve occurs: the price will increase. more or less is supplied at every price. the demand curve also shifts. the price will decrease.

more or less is supplied at every price.

A minimum legal price that is not set above the equilibrium price is a _______ price floor.

non-binding

A maximum legal price that is not set below the equilibrium price is a(n) _______ price ceiling.

non-binding, nonbinding, or ineffective

Other factors remaining constant, when the ______ of a good increases, the quantity supplied increases.

price

The primary determinant of the quantity demanded by consumers is the: price of a good or service. supply of a good or service. characteristics of a good or service. cost of production of a good or service.

price of a good or service.

When the _____ of a good changes, the quantity demanded changes.

price or cost

The _______ of a good or service is the primary determinant of the quantity demanded by consumers.

price, value, or cost

If _____ were not allowed to adjust, a shortage would persist, and the market would not return to equilibrium.

prices

When a shortage is eliminated: quantity supplied is less than the quantity demanded. quantity supplied equals the quantity demanded. the market moves away from an equilibrium where the quantity supplied equals the quantity demanded. quantity supplied exceeds the quantity demanded.

quantity supplied equals the quantity demanded.

A change in a nonprice determinant of supply will: result in a shift of the supply curve. cause the market to fall. result in a movement along the supply curve. rarely occur.

result in a shift of the supply curve.

Price floors are designed to make sure that: buyers can purchase as much of the product as they want. sellers receive a minimum price that is greater than what would be available at the market equilibrium. buyers pay a minimum price that is less than what would be available at the market equilibrium. sellers receive a minimum price that is less than what would be available at the market equilibrium.

sellers receive a minimum price that is greater than what would be available at the market equilibrium.

A situation in which the quantity of output demanded is greater than the quantity of output supplied at the current market price is called a __________.

shortage

Suppliers have an incentive to increase quantity supplied when there is a ______ in a competitive market.

shortage

When a shortage exists in a competitive market, the price provides incentives for: suppliers to increase the quantity of a good or service supplied to the market. buyers to increase the quantity of a good or service purchased to the market. suppliers to decrease the quantity of a good or service supplied to the market. buyers to put efforts toward lowering the price.

suppliers to increase the quantity of a good or service supplied to the market.

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 _____. shortage surplus equilibrium demand

surplus

To pay for needed services, governments often _______ economic activity.

tax

To pay for needed services, governments subsidize. tax economic activity. print money.

tax economic activity.

By changing the prices that buyers and sellers face in the market: the government stops the market operations. taxes encourage consumption and production. taxes change market outcomes. the government shrinks the market size.

taxes change market outcomes.

When the government imposes a new tax (or increases an existing tax), the amount that consumers pay decreases. the government does not receive revenue from the tax. the amount that consumers pay increases. government revenue decreases.

the amount that consumers pay increases.

In the presence of a tax on suppliers the cost producing the good or service decreases. the cost producing the good or service does not change. the cost producing the good or service increases. consumers are always better off.

the cost producing the good or service increases

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: consumers are making choices. the market is in flux. firms are earning profits. the market is in equilibrium.

the market is in equilibrium.

A shortage occurs when: the quantity of output supplied is greater than the quantity of output demanded at the current market price. the quantity of output demanded is greater than the quantity of output supplied at the current market price. the quantity of output supplied is greater than the quantity of output demanded at any market price. the quantity of output demanded is greater than the quantity of output supplied at any market price.

the quantity of output demanded is greater than the quantity of output supplied at the current market price.

When the price of a good, service, or resource decreases, the quantity supplied increases. the quantity demanded does not change. the quantity demanded decreases. the quantity supplied decreases.

the quantity supplied decreases.

When a nonprice determinant of supply changes: there is a change in the quantity supplied. there is a movement along the supply curve. the relationship between the quantity supplied and the price changes. there is a shift of the demand curve.

the relationship between the quantity supplied and the price changes.

When a nonprice determinant of supply changes: the supply curve shifts to the left or right. there is a shift of the demand curve. there is a movement along the supply curve. there is a movement along the demand curve.

the supply curve shifts to the left or right.

The quantity traded times the tax equals: the income spent by the buyers. the income earned by the sellers. the sum of buying and selling. the tax revenue from a tax.

the tax revenue from a tax.

The primary reason that governments tax economic activity is: to generate the revenue needed to pay for services. to change the composition of what is produced. so that one group benefits at the expense of another group. to adjust the spending power of consumers.

to generate the revenue needed to pay for services. to change the composition of what is produced. so that one group benefits at the expense of another group. to adjust the spending power of consumers.

A shortage persists when: quantity supplied exceeds quantity demanded. supply is greater than demand. price is not allowed to adjust downward. price is not allowed to adjust upward.

upward

When both demand and supply change: we can always determine with confidence how price and quantity will change. the price will always increase - but the quantity change is indeterminate. the quantity will always increase - but the price change is indeterminate. we can always determine with confidence how price or quantity will change - but not both.

we can always determine with confidence how price or quantity will change - but not both.

When both demand and supply change: we can always determine with confidence how price or quantity will change - but not both. we can always determine with confidence how price and quantity will change. the price will always increase - but the quantity change is indeterminate. the quantity will always increase - but the price change is indeterminate.

we can always determine with confidence how price or quantity will change - but not both.

Equilibrium means that:

we should expect to see the price and the quantity converge at specific levels.

Suppose demand and supply both shift simultaneously. If we know the direction of the shifts, but not the relative magnitude of the shifts, then we will know the effect on price but not quantity. we will know the effect on either the price or the quantity but not both. we will know the effect on quantity but not price. we will know the effect on both the price and the quantity.

we will know the effect on either the price or the quantity but not both.