100 Eco - Explaining Market Equilibrium NCEA 1.4

Explain the concept of market equilibrium.

• No shortage or surplus and the market clears

• PE and QE

• QS equals QD

• All of the above

If there is a shortage, who acts first, how and why?

• Consumers bid up the price so they don't miss out

• Suppliers increase the price to clear the surplus stock

• The Government introduces price controls

• None of these

If there is a surplus, who acts first? How and why?

• The Government introduces a price control

• Consumers bid up the price to avoid missing out

• Producer lowers the price to get rid of the excess stock

• All of these

How do market forces work to restore equilibrium when there is a maximum price?

• Producers increase the price to restor equilibrium.

• It is illegal to increase the price and so equilibrium cannot be restored.

• Consumers bid up the price to avoid missing out.

• All of these

What does Pe x Qe calculate?

• Consumer revenue & producer revenue

• Consumer spending & producer spending

• None of these

• Producer revenue & consumer spending

How is producers revenue calculated after the minimum price is introduced?

• Min Price x QS

• Min Price x QD

• Pe x Qe

• Pe x QS

How is producers revenue calculated after the maximum price is introduced?

• P Max x QS

• P max x QD

• Pe x Qe

• Pe x QS