Understanding Market Equilibrium Concepts

What is the equilibrium price in a market?

• The price at which only producers are willing to sell

• The price at which quantity demanded equals quantity supplied

• The price set by the government

• The highest possible price for a product

A price floor is:

• A price set below the equilibrium price

• A price set above the equilibrium price

• The same as the equilibrium price

• The lowest price at which a product can be sold, set below equilibrium

Which of the following is an example of a price floor?

• Apartment rent control

• Minimum wage

• Discounted sale price

• Price matching

What happens when the quantity supplied is greater than the quantity demanded?

• There is a shortage

• There is a surplus

• The market is in equilibrium

• Prices fall to zero

A price ceiling is:

• A price set above the equilibrium price

• A price set below the equilibrium price

• The same as a price floor

• The highest price producers are willing to accept

Which of the following is an example of a price ceiling?

• Minimum wage

• Apartment rent control

• Luxury tax

• Sales tax

How do you calculate the amount of surplus in a market?

• Subtract quantity supplied from quantity demanded

• Subtract quantity demanded from quantity supplied

• Add quantity supplied and quantity demanded

• Divide quantity supplied by quantity demanded

When does a shortage occur in a market?

• When quantity supplied is greater than quantity demanded

• When quantity supplied equals quantity demanded

• When quantity supplied is less than quantity demanded

• When prices are above equilibrium

If a price floor is set above the equilibrium price, what is the likely result?

• Shortage

• Surplus

• Equilibrium

• No effect

If the government sets a price ceiling on apartment rents below the equilibrium price, what will likely happen in the market for apartments?

• Surplus of apartments

• Shortage of apartments

• No change in the market

• Increase in apartment quality