AP Supply and Demand and Scarcity Review

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 Po 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.

At a price P0 of in the diagram above which of the following will happen in the market?

• There will be a shortage of 30 units and 45 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 20 units and 90 units will be exchanged.

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.

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 is an example of a factor of production?

• A want

• A bank

• A bond

• Capital

• Stock

Which of the following is always true of an economy operating on its production possibilities frontier?

• A. Its resources are fully employed.

• B It is allocatively efficient.

• C It cannot trade with other nations because it is the most efficient producer of tradeable goods.

• D It will necessarily operate on the same frontier the following year.

• E It must be a command economy.

Which of the following is the most fundamental issue that economics addresses?

• A Choice of appropriate technology

• B Reduction of unemployment

• C Reduction of budget deficit

• D Promotion of privatization

• E Use of scarce resources