#1
What is market equilibrium?
When quantity demanded equals quantity supplied
ExplanationBalanced state where demand matches supply.
#2
What happens if the price in a market is above the equilibrium price?
Excess supply
ExplanationMore goods supplied than demanded.
#3
Which of the following best describes a market in equilibrium?
Quantity demanded equals quantity supplied
ExplanationDemand equals supply, maintaining stability.
#4
Which of the following is NOT a price control?
Price stabilization
ExplanationPolicy aiming to stabilize prices, not control.
#5
What is the primary purpose of a price ceiling?
To maintain a maximum price level
ExplanationLimits prices from exceeding a set level.
#6
What is the impact of a price ceiling below the equilibrium price?
Shortage
ExplanationInsufficient goods available due to low prices.
#7
Which of the following is NOT a factor that can shift the demand curve?
Changes in technology
ExplanationTechnological advancements affect supply.
#8
What is the likely consequence of imposing a price ceiling on rental housing in a city with high demand?
Shortage of rental units
ExplanationMore demand than supply due to capped prices.
#9
Which of the following would cause a rightward shift of the supply curve?
Decrease in the price of raw materials
ExplanationLower production costs lead to increased supply.
#10
What happens to market equilibrium price and quantity if both demand and supply increase?
Price increases, quantity increases
ExplanationHigher demand and supply push both price and quantity up.
#11
What is the effect of a price floor set above the equilibrium price?
Creates a surplus
ExplanationExcess supply due to artificially high prices.
#12
What happens to market equilibrium price and quantity if both demand and supply decrease?
Price decreases, quantity decreases
ExplanationLower demand and supply reduce both price and quantity.
#13
Which of the following is a potential consequence of implementing a price floor below the equilibrium price?
Decreased quantity supplied
ExplanationLower supply due to lower market prices.
#14
If the government imposes a price floor above the equilibrium price, what is the likely result?
Surplus
ExplanationExcess supply due to artificially high prices.
#15
What happens to the market price if there is an increase in both demand and supply?
Depends on the magnitude of the changes
ExplanationThe balance between demand and supply determines price.
#16
What is the primary objective of price controls during wartime or emergency situations?
To stabilize prices
ExplanationEnsuring price stability for essential goods.
#17
How does a subsidy affect the market equilibrium?
It increases equilibrium price and quantity
ExplanationGovernment support boosts both price and quantity.
#18
In a market with a price ceiling, what might suppliers do to respond to the constraint?
Reduce production due to lower profitability
ExplanationCutting production due to reduced profit margins.
#19
What effect does a binding price floor have on market outcomes?
It results in a surplus of the good
ExplanationExcess supply due to artificially high prices.
#20
What can happen in a market if the government imposes a price ceiling below the equilibrium price?
Shortage
ExplanationInsufficient goods available due to low prices.
#21
How does an increase in consumer income affect demand?
Increases demand
ExplanationHigher income enables more purchasing.
#22
What is the likely outcome of a subsidy in a market?
Increase in quantity demanded
ExplanationGovernment support encourages higher demand.
#23
What effect does a binding price ceiling have on market outcomes?
It creates a shortage of the good
ExplanationInsufficient goods available due to capped prices.
#24
How does a decrease in the price of a complement affect demand?
Increases demand
ExplanationLower prices of complements encourage more purchasing.
#25
What is the likely outcome of a price ceiling below the equilibrium price?
Shortage
ExplanationInsufficient goods available due to low prices.