Supply and Demand: Equilibrium, Surplus, and Shortage

Define equilibrium in the context of supply and demand.

• Equilibrium is the point at which the quantity supplied equals the quantity demanded.

• Equilibrium is the point at which the price is always increasing.

• Equilibrium is when supply is greater than demand at all times.

• Equilibrium is when demand is always less than supply.

Define surplus in the context of supply and demand.

• Surplus is a situation where the quantity supplied is greater than the quantity demanded at a given price.

• Surplus is a situation where the quantity demanded is greater than the quantity supplied at a given price.

• Surplus is when supply and demand are always equal.

• Surplus is when there is no supply in the market.

Define shortage in the context of supply and demand.

• Shortage is a situation where the quantity demanded is greater than the quantity supplied at a given price.

• Shortage is a situation where the quantity supplied is greater than the quantity demanded at a given price.

• Shortage is when supply and demand are equal at a given price.

• Shortage is when there is no demand for a product at any price.

A producer may have a surplus or a shortage when:

• the quantity supplied does not equal the quantity demanded.

• the price is always at equilibrium.

• consumers buy exactly what is produced.

• there is no change in market conditions.

A price ceiling is a maximum legal price set below equilibrium, while a price floor is a minimum legal price set above equilibrium.

• A price ceiling is a maximum legal price set below equilibrium, while a price floor is a minimum legal price set above equilibrium.

• A price ceiling is a minimum legal price set above equilibrium, while a price floor is a maximum legal price set below equilibrium.

• Both price ceiling and price floor are set at the equilibrium price.

• A price ceiling and a price floor both increase the market price above equilibrium.

According to the passage, what is demand?

• The amount of a good a producer is willing to make for sale

• The amount of a good consumers are willing to buy

• The price of a good or service

• The number of businesses in the market

According to the passage, what happens to the supply of a good when prices increase?

• A) Businesses will supply less of the good

• B) Businesses will supply more of the good

• C) Consumers will buy more of the good

• D) The price will decrease

Fill in the blank: The equilibrium price is the price at which the _______ and the _______ agree on a price.

• producer, consumers

• buyers, sellers

• government, firms

• investors, banks

At what price do the supply and demand curves intersect, indicating the equilibrium price?

• $600

• $400

• $800

• $1000

According to the passage, supply and demand act in _______ ways when it comes to reacting to price.

• opposite

• similar

• identical

• parallel