1.5 & 1.6 - Supply and Market Equilibrium

If the wage rate of workers producing a good decreases, then which of the following will most likely occur?

• The demand curve will shift to the right.

• The supply of the good will increase.

• The quantity supplied of the good will decrease.

• Demand for the good will increase

• Quantity demanded for the good will decrease.

Which of the following describes the law of supply?

• An increase in the price of a good will decrease the quantity demanded.

• The price of a good will increase if production input costs increase.

• An increase in taxes will decrease the supply of a good.

• An increase in the number of sellers will increase the supply of a good.

• An increase in the price of a good will increase the quantity supplied.

Which of the following will occur in a competitive market when the price of a good is less than the equilibrium price?

• Price will decrease to eliminate the surplus and restore equilibrium.

• Price will decrease to eliminate the shortage and restore equilibrium.

• Price will increase to eliminate the surplus and restore equilibrium.

• Price will increase to eliminate the shortage and restore equilibrium.

• Price will remain constant, because supply will increase to eliminate the shortage.

Which of the following changes in the supply of and the demand for a good will definitely result in a decrease in both the equilibrium price and quantity of the good?

• Supply - Increase

  Demand - Increase

• Supply - Increase

  Demand - No change

• Supply - No change

  Demand - Decrease

• Supply - Decrease

  Demand - Increase

• Supply - Decrease

  Demand - Decrease

To protect high-cost domestic producers, a country imposes a tariff on an imported commodity, Y. Which of the following is most likely to occur in the short run?

I. A decrease in domestic production of Y

II. An increase in domestic production of Y

III. An increase in foreign output of Y

• I only

• II only

• III only

• I and III only

• II and III only

The table above shows the quantity demanded and quantity supplied for bushels of wheat at various prices. Which of the following combinations is the equilibrium price and quantity for wheat?

• Price - $2.00

  Bushels of Wheat - 10,000

• Price - $1.75

  Bushels of Wheat - 15,000

• Price - $1.50

  Bushels of Wheat - 20,000

• Price - $1.25

  Bushels of Wheat - 30,000

• Price - $0.75

  Bushels of Wheat - 5,000

The graph above shows the demand for and supply of a good. If the market price is P1, then

• there is a shortage, and the price will rise

• there is a shortage, and the price will fall

• there is a surplus, and the price will rise

• there is a surplus, and the price will fall

• demand will decrease and supply will increase

The supply (S) and demand (D) for a good are shown in the diagram above.

At a price of P2 in the diagram above which of the following will happen in the market?

• There will be a surplus of 30 units and 90 units will be exchanged.

• There will be a surplus of 90 units and 30 units will be exchanged.

• There will be a surplus of 60 units and 30 units will be exchanged.

• There will be a shortage of 90 units and 30 units will be exchanged.

• There will be a shortage of 30 units and 90 units will be exchanged.

Assume that the market for bottled water is in equilibrium. If both the supply of and the demand for bottled water decrease, what will be the effect on equilibrium price and quantity?

• Price - Decrease

  Quantity - Decrease

• Price - Decrease

  Quantity - Increase

• Price - Increase

  Quantity - Decrease

• Price - Increase

  Quantity - Indeterminate

• Price - Indeterminate

  Quantity​ - Decrease

The supply (S) and demand (D) for a good are shown in the diagram above.

At a price of P0 in the diagram above, which of the following is true??

• The existing surplus in the market will cause upward pressure on prices until equilibrium is reached at 75 units.

• The existing surplus in the market will cause downward pressure on prices until equilibrium is reached at 60 units.

• The existing shortage in the market will cause upward pressure on prices until equilibrium is reached at 30 units.

• The existing shortage in the market will cause upward pressure on prices until equilibrium is reached at 60 units.

• The existing shortage in the market will cause downward pressure on prices until equilibrium is reached at 45 units.