Market Equilibrium

If the supply of a product increases while demand remains constant, what is most likely the effect on the equilibrium price and quantity?

• a. Price and quantity both increases.

• b. Price decreases, quantity increases.

• c. Price and quantity both decreases.

• d. Price increases, quantity decreases.

What happens in a market when the quantity demanded is equal to the quantity supplied?

• a. Surplus

• b. Shortage

• c. Equilibrium

• d. Price ceiling

Virginia was asked to buy vegetables in the public market. At first, she asked for the prices per kilo of the things she needs. She haggled with the seller on the price and quantity she wanted to buy. The vendor agreed to the price and quantity. Which statement above reflects the concept of Equilibrium?

• a. Her asking the prices of the vegetables she needs

• b. She haggled for the prices and quantity she desired.

• c. Her haggling the prices and the vendor agreeing to it.

• d. Virginia was asked to buy vegetables in the public market.

Jennifer will celebrate her birthday tomorrow. Most of her friends are guys who love to drink cold beverages. She needs to secure as many ice cubes as she can. She asked her father to buy 10 packs of ice cubes, but her father only managed to buy 5 packs. The above situation is known as shortage. What causes a shortage to happen?

• a. When prices are below the equilibrium price, the quantity supplied increases while quantity demanded increases.

• b. When prices are below the equilibrium price, the quantity supplied decreases while quantity demanded increases.

• c. When prices are above the equilibrium price, the quantity supplied increases while the quantity demanded decreases.

• d. When prices are below the equilibrium price, the quantity supplied decreases while the quantity demanded decreases.

Lately, farmers from Benguet were forced to sell their vegetables at a much lower price due to oversupply. Sellers had difficulty finding buyers for their vegetables. They have exhausted their means of looking for markets where they can sell/ dispose of their products. What causes a surplus to occur?

• a. When prices are below the equilibrium price, the quantity supplied increases while quantity demanded increases.

• b. When prices are above, the equilibrium price, the quantity supplied decreases while quantity demanded increases.

• c. When prices are above the equilibrium price, the quantity supplied increases while the quantity demanded decreases.

• d. When prices are below the equilibrium price, the quantity supplied decreases while the quantity demanded decreases.