Supply, Demand, and Equilibrium Review

Which of the following will cause the demand for milk to decrease?

• Increase in the price of the substitute

• A decrease in income assuming that milk is a normal good

• A decrease in the price of milk

• An increase in the price of milk

• A decrease in the price of a complementary good

Which of the following will cause the quantity demanded of milk to decrease?

• Increase in the price of a substitute

• A decrease in income assuming that milk is a normal good

• A decrease in the price of milk

• An increase in the price of milk

• A decrease in the price of a complementary good

Which of the following will cause the quantity supplied of milk to decrease?

• Decrease in the price of a key resource

• A decrease in the number of milk producers

• A decrease in the price of milk

• An increase in the price of milk

• A subsidy for milk producers

The supply curve for automobiles will shift to the left in response to

• An increase in the efficiency of robot technology

• An increase in wages in the automobile industry

• A decrease in the number of consumers purchasing automobiles

• A decrease in the interest rates for automobile loans

• A decrease in consumer’s income

In the market shown in the graph above, at a price of $5, there will be

• A surplus and the price will eventually fall

• A surplus generating a decrease in demand

• A shortage and the price will eventually rise

• A shortage generating an increase in supply

• An increase in the supply and a decrease in demand

The graph above shows the market demand for good X. A movement from point A to point B would most likely be caused by ... (hint - draw out changes in equilibrium)

• An increase in the price of good Z, a substitute

• An increase in consumers’ income

• A decrease in consumers’ income

• A decrease in production costs for good X

• A decrease in in the supply of good X

If one-fourth of a nation’s wheat crop is destroyed by a flood in a given season, then the price of wheat and the quantity sold will change in the short run in which of the following ways?

• Price = decrease and Quantity Sold = No Change

• Price = decrease and Quantity Sold = increase

• Price = increase and Quantity Sold = decrease

• Price = increase and Quantity Sold = increase

• Price = no change and Quantity Sold = increase

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

• Supply = increase and Demand = increase

• Supply = increase and Demand = no change

• Supply = no change and Demand = decrease

• Supply = decrease and Demand = increase

• Supply = decrease and Demand = decrease

Which of the following will occur if a legal price floor is placed on a good below its free market equilibrium?

• Surpluses will develop

• Shortages will develop

• Underground markets will develop

• The equilibrium price and quantity will remain the same

• The quantity sold will increase