Equilibrium Price in the Market Place

What is equilibrium in economics?

• A situation where demand exceeds supply

• A situation where supply exceeds demand

• A situation where supply equals demand

• A situation where there is no demand

Which of the following is true about equilibrium price?

• It is always determined by supply alone

• It is always determined by demand alone

• It is determined by both supply and demand

• It is determined by government regulations

When demand increases while supply remains constant, what happens to the equilibrium price and quantity?

• Price increases, quantity decreases

• Price increases, quantity increases

• Price decreases, quantity increases

• Price decreases, quantity decreases

If there is excess demand in the market, what will likely happen?

• Price will increase

• Price will decrease

• Price will remain constant

• Quantity supplied will decrease

Which of the following would lead to a decrease in equilibrium price?

• Increase in supply and increase in demand

• Decrease in supply and increase in demand

• Increase in supply and decrease in demand

• Decrease in supply and decrease in demand

Which of the following is not a determinant of demand?

• Income

• Price of related goods

• Technology

• Tastes and preferences

Which of the following would cause a rightward shift of the supply curve?

• Increase in input prices

• Decrease in the number of producers

• Technological advancement

• Increase in taxes

If the price of a substitute good increases, what happens to the demand for the original good?

• Increases

• Decreases

• Remains unchanged

• Becomes perfectly elastic

When the quantity supplied exceeds the quantity demanded, what is the market condition called?

• Excess demand

• Excess supply

• Equilibrium

• Scarcity

What is the result of a price ceiling set below the equilibrium price?

• Surplus

• Shortage

• Equilibrium

• No effect on the market