#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
If the government imposes a price floor above the equilibrium price, what is the likely result?
Surplus
ExplanationExcess supply due to artificially high prices.
#10
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.
#11
What is the primary objective of price controls during wartime or emergency situations?
To stabilize prices
ExplanationEnsuring price stability for essential goods.
#12
How does a subsidy affect the market equilibrium?
It increases equilibrium price and quantity
ExplanationGovernment support boosts both price and quantity.
#13
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.