Unit 9 Part 1.2

What is meant by the equilibrium price in the market for a good?

• the average price paid by consumers

• the price at which maximum profit is made

• the price at which the supply and demand curves intersect

• the price at which the producer breaks even

The government increases the rate of income tax and decreases the rate of a sales tax (VAT). From the initial equilibrium point of X, which letter indicates the new equilibrium point in a market for normal goods?

• A

• B

• C

• D

The diagram shows the market for fresh fish in the Caribbean with equilibrium point X. A new type of fishing boat increases production, which reduces costs. Which point represents the new equilibrium?

• A

• B

• C

• D

The major oil producers sometimes try to raise the price of oil. How would this be shown on a demand and supply diagram?

• a shift in the demand curve to the left

• a shift in the supply curve to the right

• a movement along the demand curve to the right

• a shift in the supply curve to the left

The diagram shows a market for rice that is in equilibrium. Which area represents the total revenue for rice farmers?

• A. OWXY

• B. OVXY

• C. OVXZ

• D. OTXY

In August 2013, a lengthy strike in north-east India, where the finest and most expensive Darjeeling tea is grown, shut down the tea industry at harvest time. What is the likely outcome of such a situation on a demand and supply diagram for Darjeeling tea?

• The price will rise because there will be a fall in demand for the remaining Darjeeling tea.

• The price will rise because the strike will cause a movement down the supply curve.

• The price will rise because demand will switch to other teas.

• The price will rise because the supply curve will move to the left.

The diagram shows the demand and supply curves for digital cameras. The original equilibrium point is X. What will be the new equilibrium point if these cameras become more fashionable and the rate of sales tax rises?

• A

• B

• C

• D

The table shows the demand and supply schedules for eggs. What will be the equilibrium price of eggs?

• $0.50

• $0.30

• $0.20

• $0.40

Four changes affecting the supply of a good are listed below. Which would cause the supply curve to shift to the left?

• a decrease in its market price

• an increase in labour productivity

• the introduction of a sales tax

• an improvement in technology

In a market there is a shortage of a good. What change would cause the market to come to an equilibrium?

• a fall in price

• a rise in price

• a decrease in supply

• an increase in demand