Market Equilibrium and Policy

Which of the following will cause a decrease in market equilibrium price and an increase in equilibrium quantity? -An increase in supply. -An increase in demand. -A decrease in demand. -A decrease in supply.

An increase in supply.

A change in the quantity demanded at each price is: -related to supply changes. -an unusual market event. -a change in demand. -a change in the quantity demanded.

a change in demand.

In examining the market for apps for smart devices, there is a tax levied on the sellers of apps. The effect of the event will be ____ in ____. As a result, the equilibrium price will ____ and the equilibrium quantity will ____.

a decrease; supply. increase; decrease.

Shortages: -generally occur after surpluses. -are usually the product of price controls. -typically cause prices to fall. -are usually indicated by high prices.

are usually the product of price controls.

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

both demand and supply change.

Rent control is an example of a price ____.

ceiling

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

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

Non-price determinants are held ____ for any given demand curve.

constant

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

demand curve

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

determinant

The price that balances demand and supply is called the ____ price.

equilibrium

When the quantity supplied of a good, service, or resource equals the quantity demanded, this quantity traded is known as the: -equilibrium quantity. -expected quantity. -equilibrium price. -absolute quantity.

equilibrium quantity.

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

floor, ceiling, or control.

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

held constant for any given demand curve.

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

higher than

The equilibrium price is also known as the: -expected price. -only price. -balanced price. -market-clearing price.

market-clearing price.

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

price

Other things remaining constant, when a good's ____ falls, its quantity supplied falls.

price

Shortages cannot push the market to an equilibrium in the presence of: -price controls. -profits. -surpluses. -high prices.

price controls

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

price floor

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

price floor

If _____ were not allowed to adjust, a shortage would persist, and the market would not return to equilibrium. -taxes -costs -quantities -prices -risks

prices

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

result in a shift of the demand curve.

A tax on suppliers will cause the ____ schedule to shift ____. -demand, left -demand, right -supply, right -supply, left

supply, left

Recent rains increase the demand for kayaks, as paddlers want to take advantage of the exciting river conditions on the Oconee River. At the same time, new plastics technology makes kayaks less expensive to make. As a result, one should expect -the equilibrium price to fall, but the equilibrium quantity to be indeterminate from the information given. -the equilibrium price to be indeterminate from the information given, but the equilibrium quantity to rise. -the equilibrium price to be indeterminate from the information given, but the equilibrium quantity to fall. -the equilibrium price to rise, but the equilibrium quantity to be indeterminate from the information given.

the equilibrium price to be indeterminate from the information given, but the equilibrium quantity to rise.

A price ceiling is: -the maximum legal price at which a good, service, or resource can be sold. -the 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.

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

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 any 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 the current market price.

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

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

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

shortage

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

shortage

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

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 put efforts toward lowering the price. -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.

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 _____. -surplus -demand -shortage -equilibrium

surplus

One way to reduce the quantity demanded for cigars would be to impose a ____ on cigars.

tax

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

the quantity supplied decreases.

When the price of a good increases: -the quantity supplied rises. -the quantity supplied falls. -the supply curve shifts right.

the quantity supplied rises.

If price was not allowed to adjust, a shortage: -would not persist, and the market would return to equilibrium slowly. -would not persist, and the market would return to equilibrium quickly. -would persist, and the market would not return to equilibrium. -would become a surplus.

would persist, and the market would not return to equilibrium.

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. (Taxes can be imposed to raise revenue, and the government benefits from taxes in this way).

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

In examining the market for smart phones, there is a reduction in the number of sellers. The effect of the event will be ____ in ____. As a result, the equilibrium price will ____ and the equilibrium quantity will ____.

a decrease; supply. increase; decrease.

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

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

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

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. -some change in demand that is not readily observable. -a market determinant of demand. -a nonprice determinant of demand.

a nonprice determinant of demand.

When more or less of a good, service, or resource is supplied at every price, there is: -a shift of the demand curve. -a shift of the supply curve to the right or left. -a movement along the demand curve. -a movement along the supply curve.

a shift of the supply curve to the right or left.

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 -equilibrium -a price control -a surplus

a surplus

In examining the market for personal computers, a technological improvement reduces the cost of production. The effect of the event will be ____ in ____. As a result, the equilibrium price will ____ and the equilibrium quantity will ____.

an increase; supply. decrease; increase.

At equilibrium: -all those who want to buy or sell a unit of the good can do so at the price that is most profitable. -anyone who wants to buy or sell a unit of the good can do so at the market price. -anyone who wants to buy or sell a unit of the good can do so at the preferred price. -most of those who want to buy or sell a unit of the good can do so at the market price.

anyone who wants to buy or sell a unit of the good can do so at the market price.

Surpluses and shortages: -are denoted in dollars of value. -are denoted in units of the product itself. -cannot be compared because of unit differences. -are only estimated.

are denoted in units of the product itself.

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

both demand and supply change.

A market for a product reaches equilibrium when -price falls further after there is a shortage. -the actual quantity bought by buyers equals actual quantity sold by sellers. -buyers intend to buy a quantity equal to the quantity that sellers intend to sell. -the price rises further after there is a surplus.

buyers intend to buy a quantity equal to the quantity that sellers intend to sell.

The nonprice determinants or other factors that affect demand are held constant for any given: -cost curve. -supply curve. -demand 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 quantity traded when the quantity supplied of a good, service, or resource equals the quantity demanded is the _____ quantity. -market -equilibrium -demanded -supplied

equilibrium

When a shortage is eliminated, the market returns to a(n) ____ where the quantity supplied equals the quantity demanded.

equilibrium

When the quantity supplied of a good, service, or resource equals the quantity demanded, this quantity traded is known as the: -equilibrium price. -expected quantity. -absolute quantity. -equilibrium quantity.

equilibrium quantity.

If the quantity supplied equals the quantity demanded: -equilibrium will stay the same if all else is equal. -equilibrium will stay the same if there are only market forces acting on it. -the market quantity cannot change. -the market price cannot change.

equilibrium will stay the same if all else is equal.

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 ________. -floor. -adjustment. -ceiling. -reduction.

floor

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

floor

The ____ wage is the most common form of price floor.

minimum

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

more or less is supplied at every price.

Suppose that at a price of $5, consumers want 50 units, and producers want to sell 75 units. This is: -not an equilibrium, because the quantity cannot change. -not an equilibrium, because the price cannot change. -not an equilibrium, because the quantity supplied does not equal the quantity demanded. -an equilibrium, because the quantity supplied does not equal the quantity demanded.

not an equilibrium, because the quantity supplied does not equal the quantity demanded.

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

quantity supplied equals the quantity demanded.