Market Equilibrium and Supply

What is market equilibrium?

• The point where demand exceeds supply

• The point where supply equals demand at a specific price

• The price set by the government for essential goods

• The quantity of goods sellers want to sell at any price

Which of the following is an example of market equilibrium?

• The government setting a minimum price for dates

• Sellers reducing prices to increase demand

• Buyers purchasing dates at AED 20 per kg, matching seller expectations

• Sellers refusing to sell below AED 25 per kg

Which of these is NOT a determinant of demand?

• Consumer income

• Cost of production

• Future expectations

• Population size

How can subsidies impact supply?

• Increase the supply of a product

• Decrease the cost of production for buyers

• Reduce the need for related goods

• Increase the cost of production

A price ceiling leads to:

• A shortage if the ceiling is below equilibrium

• A surplus if the ceiling is above equilibrium

• Equal demand and supply at any price

• Unchanged market conditions

An example of a price floor is:

• A government-mandated maximum price for essential medicines

• Subsidized prices for solar panels

• A minimum price set for Emirati-grown dates

• Quantity limits on fish caught in UAE waters

If a product's demand is elastic:

• A small price increase leads to a significant decrease in demand

• A price increase has no impact on demand

• Demand remains constant regardless of price changes

• Total revenue increases when prices increase

Which product is likely to have inelastic demand?

• Soft drinks

• Luxury handbags

• Petrol

• Smartphones

If price increases and total revenue decreases, the demand for the product is:

• Elastic

• Inelastic

• Unit elastic

• Unaffected

Total revenue is calculated as:

• Price × Supply

• Price × Quantity

• Demand × Quantity

• Supply × Demand