Market Equilibrium

Suppose that the market for Coca-Cola is originally at point D. The movement from point D to B is a combination of a(n) ………….. and a(n) ………………. .

• decrease in supply; decrease in quantity demanded

• decrease in supply; increase in quantity demanded

• increase in supply; increase in quantity demanded

• decrease in supply; increase in demand

If the price is fixed at RM20 in this market, there would be ……………………..

• an excess supply of 40 units

• an equilibrium in the market

• an excess demand of 40 units

• an excess demand in the market, but the quantity is difficult to determine

Suppose the sellers in this market increased the price of their product to RM35 per unit. What will most likely happen?

• The sellers will be forced to reduce their price (excess supply is created at RM35).

• The sellers will be forced to reduce their price (excess demand is created at RM35).

• The sellers will be forced to increase their price (excess demand is created at RM35).

• The sellers will not change their price (more profits are gained at RM35).

Let us assume that the government imposed a price ceiling of RM30 in this market. What will most likely happen?

• Black markets will exist.

• Excess demand will exist.

• The price will not change.

• A new equilibrium will be reached at the price of RM30.

The market will be in equilibrium when the price is at ………….. and the quantity demanded is ……………

• RM15; 100 units

• RM20; 80 units

• RM25; 60 units

• RM35; 20 units

The entrance tickets to Legoland Malaysia are very expensive. However, there is a daily queue to buy the tickets. Some visitors are not even able to get tickets on the same day. From this, we know that the prices of Legoland Malaysia’s tickets ……………

• are in equilibrium

• are above equilibrium

• are below equilibrium

• cannot be categorized due to limited information

The initial market price and quantity for Good A are RM5 and 2,000 units, respectively. A subsidy of RM2 per unit given by the government has changed the equilibrium price and quantity to RM4 and 3,500 units, respectively. Which of the following statements is true?

• Producers gain more benefits.

• Consumers gain more benefits.

• The government gains most of the benefits.

• Both consumers and producers enjoy equal benefits.

The equilibrium price and quantity will be ……………………..

• RM2.00 and 400 kg

• RM2.50 and 300 kg

• RM2.00 and 300 kg

• RM3.50 and 0 kg

If the price in this market is RM3, …………………

• the amount of carrots sold and purchased will be the same

• sellers would be unable to sell all their carrots

• buyers would want to purchase more carrots

• there would be a shortage of carrots

The consumer surplus and producer surplus will be ……………………

• RM225 and RM150

• RM225 and RM225

• RM425 and RM250

• difficult to determine