Market Equilibrium

What is market equilibrium?

• The point at which quantity demanded exceeds quantity supplied

• The point at which quantity demanded equals quantity supplied

• The point at which price is determined by demand and supply

• The point at which quantity supplied exceeds quantity demanded

What are the two main factors that determine market equilibrium?

• price and quantity

• cost and revenue

• competition and market share

• supply and demand

Define the term 'demand' in the context of market equilibrium.

• The quantity of a good or service that consumers are willing to purchase at any price.

• The quantity of a good or service that consumers are not willing to purchase at any price.

• The quantity of a good or service that producers are willing and able to supply at a given price.

• The quantity of a good or service that consumers are willing and able to purchase at a given price.

Define the term 'supply' in the context of market equilibrium.

• The quantity of goods or services that producers are unwilling or unable to offer for sale at different prices in a given market.

• The quantity of goods or services that producers are willing and able to offer for sale at different prices in a given market.

• The quantity of goods or services that producers are willing and able to offer for sale at the same price in a given market.

• The quantity of goods or services that consumers are willing and able to purchase at different prices in a given market.

What happens to price and quantity when there is a shortage in the market?

• The price decreases and the quantity decreases.

• The price increases and the quantity decreases.

• The price decreases and the quantity increases.

• The price increases and the quantity increases.

What happens to price and quantity when there is a surplus in the market?

• The price stays the same and the quantity decreases.

• The price increases and the quantity stays the same.

• The price decreases and the quantity increases.

• The price increases and the quantity decreases.

Explain the concept of 'price ceiling' and its impact on market equilibrium.

• A price ceiling is a government-imposed minimum price that has no impact on market equilibrium.

• A price ceiling is a government-imposed minimum price that creates a surplus in the market equilibrium.

• A price ceiling is a government-imposed maximum price that creates a shortage in the market equilibrium.

• A price ceiling is a government-imposed maximum price that creates a surplus in the market equilibrium.

Explain the concept of 'price floor' and its impact on market equilibrium.

• A price floor is a market-driven maximum price set above the equilibrium price. It creates a shortage of the product.

• A price floor is a government-imposed minimum price set below the equilibrium price in a market. It creates a surplus of the product.

• A price floor is a government-imposed maximum price set below the equilibrium price in a market. It creates a shortage of the product.

• A price floor is a government-imposed minimum price set above the equilibrium price in a market. It creates a surplus of the product.

What are the effects of an increase in demand on market equilibrium?

• An increase in price and a decrease in quantity.

• A decrease in price and an increase in quantity.

• No change in price and an increase in quantity.

• An increase in both price and quantity.

What are the effects of a decrease in supply on market equilibrium?

• The market equilibrium shifts to a lower price and higher quantity.

• The market equilibrium remains unchanged.

• The market equilibrium shifts to a lower price and lower quantity.

• The market equilibrium shifts to a higher price and lower quantity.