Macro Ch. 3 pt 2

market equilibrium

supply equals demand

The demand for pears is highest during the summer and lowest during winter. Yet pear prices are normally lower in summer than in winter. What must be happening to the supply of pears, from winter to summer, for the equilibrium price to fall?

the supply increases more than the demand increases

If a shortage exists in a market, then we know that the actual price is

below the equilibrium price, and quantity demanded is greater than quantity supplied

When economist speak of a surplus, they mean a situation in which

A: all of the above firms have unsold goods pilling up. the market price is above the equilibrium price. the quantity supplied exceeds quantity demanded. ( this could only happen when the market price is above the equilibrium price )

Market price is determined by

A: both supply and demand The intersection of supply and demand determines equilibrium price. Without both curves, we can only speculate on the price.

When there is a shortage of a good...

A: consumers compete against one another by bidding the price upwards... The process continues until the market is finally in equilibrium.

A news story from 2017 about the oil market stated " crude oil process fell... in part {due to} renewed concerns about the global supply glut" In referring to a global glut the article describes the result of a significant

A: increase in supply of , relative to.... In referring to a "global glut of crude" the article describes the result of a significant increase in supply relative to the demand for crude oil

(previous) The glut will start to shrink when....

A: reduce the amount that they offer for sale, and buyers increase the amount they buy. As the market price fell in response to the surplus, crude oil producers would reduce the amount they they offer for sale and buyers would increase the amount they buy. These changes would continue until a new market equilibrium was reached.

According to an article in the Wall Street Journal, a decline in demand for ethanol, which is made from corn, has reduced the demand for corn, Many U.S. farmers can use the same acreage to grow either corn or soybeans A decline in the demand for corn will ... This will result in the equilibrium price of soybeans ___________ and the quantity of soy ___________

A: shift the soybean supply curve to the right decreasing; increasing

In a competitive market, firms can dictate what the equilibrium price of a good or a service will be

False

A student writes the following "increased production leads to lower price, which in turn increases demand" This student must be referring to

an increase in quantity supplied

market equilibrium

a situation in which quantity demanded equals quantity supplied

(from previous question) This change resulted in a

a surplus of oil such that there is a greater quantity supplied than quantity demanded for crude oil

Suppose the demand curve shifts to the right... a. the new demand curve should be __________ b. furthermore, the new demand curve should _________ the original demand curve c. with this shift, equilibrium price will _________ and equilibrium quantity will _________

a. downward sloping b. not intersect c. increase; increase

Suppose supply shifts to the right... a. the new supply curve should be ________ b. furthermore, the new supply curve should ______________ the original supply curve. c. with this shift, equilibrium price will _________ and equilibrium quantity will __________

a. upward sloping b. not intersect c. decrease; increase

If a surplus exists in a market, we know that the actual price is

above the equilibrium price, and the quantity supplied is greater than the quantity demanded

If the market price 'P mkt' is above the price 'P 0', then quantity supplied ________ quantity demanded and the market is in __________

greater than; surplus

suppose the demand curve and supply curve shifts to the right by less than the demand curve ... with these shifts, the equilibrium price will ________

increase

If a market is in equilibrium, is it necessarily true that all potential buyers and sellers are satisfied with the market price ?

no