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Terms in this set (25)
Which of the following is the correct way to describe equilibrium in a market?
At equilibrium, quantity demanded equals quantity supplied.
At a product's equilibrium price
the product's demand curve crosses the product's supply curve.
Refer to Figure 3-3. The figure above shows the supply and demand curves for two markets: the market for original Picasso paintings and the market for designer jeans. Which graph most likely represents which market?
Graph B represents the market for original Picasso paintings and Graph A represents the market for designer jeans.
In 2004, hurricanes damaged a large portion of Florida's orange crop. As a result of this, many orange growers were not able to supply fruit to the market. At the pre-hurricane equilibrium price (i.e., at the initial equilibrium price), we would expect to see
a shortage of oranges.
Refer to Figure 3-4. If the price is $10,
there would be a shortage of 600 units.
Refer to Figure 3-4. At a price of $10, how many units will be sold?
200
Refer to Figure 3-4. If the current market price is $10, the market will achieve equilibrium by
a price increase, increasing the quantity supplied and decreasing the quantity demanded.
Refer to Figure 3-4. If the price is $15,
there would be a shortage of 300 units.
Refer to Figure 3-4. At a price of $15, how many units will be sold?
400
Refer to Figure 3-4. If the current market price is $15, the market will achieve equilibrium by
a price increase, increasing the quantity supplied and decreasing the quantity demanded.
Refer to Figure 3-5. At a price of $15
there would be a surplus of 4 units.
Refer to Figure 3-5. At a price of $5, the quantity sold
is 2 units.
Refer to Figure 3-5. At a price of $20
there would be a surplus of 8 units.
Refer to Figure 3-5. At a price of $10, the quantity sold
is 4 units.
Refer to Figure 3-5. In a free market such as that depicted above, a surplus is eliminated by
a price decrease, decreasing the quantity supplied and increasing the quantity demanded.
Assume there is a shortage in the market for digital music players. Which of the following statements correctly describes this situation?
Some consumers will be unable to obtain digital music players at the market price and will have an incentive to offer to buy the product at a higher price.
In a perfectly competitive market, there are ________ buyers and ________ sellers.
many; many
Refer to Figure 3-6. The figure above represents the market for canvas tote bags. Assume that the market price is $35. Which of the following statements is true?
There is a surplus that will cause the price to decrease; quantity demanded will then increase and quantity supplied will decrease until the price equals $25.
Refer to Figure 3-6. The figure above represents the market for canvas tote bags. Assume that the price of tote bags is $15. At this price
there is a shortage, equal to 55 tote bags, that will be eliminated when the price rises to $25.
Refer to Figure 3-6. The figure above represents the market for canvas tote bags. Compare the conditions in the market when the price is $50 and when the price is $35. Which of the following describes how the market differs at these prices?
The difference between quantity supplied and quantity demanded is greater at $50 than at $35.
If, for a product, the quantity supplied exceeds the quantity demanded, the market price will fall until
quantity demanded equals quantity supplied. The market price will then equal the equilibrium price.
Which of the following is evidence of a surplus of bananas?
The price of bananas is lowered in order to increase sales.
Which of the following is evidence of a shortage of walnuts?
The quantity demanded of walnuts is greater than the quantity supplied.
Auctions in recent years have resulted in higher prices paid for letters written by John Wilkes Booth than those written by Abraham Lincoln. Which of the following events would cause the price differences in these letters to get smaller?
The demand for Lincoln letters increases and the supply of Booth letters increases.
Auctions in recent years have resulted in higher prices paid for letters written by John Wilkes Booth than those written by Abraham Lincoln. What is a reason for this difference in price?
There are more letters available for collectors to buy that were written by Lincoln than there are letters that were written by Booth.
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In the short - run, as output increases, average fixed cost A. remains constant. B. falls and then rises after a certain output level. C. rises initially, and then falls continuously. D. falls continuously. E. rises continuously
Verified answer
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System in which decisions on production and consumption of goods and services are based entirely on exchange, or trade _____
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