SOLVED

3.3  Market Equilibrium: Putting Demand and Supply Together 1) Which of the following is the correct way to describe equilibrium in a market? A) At equilibrium, demand equals supply. B) At equilibrium, quantity demanded equals quantity supplied. C) At equilibrium, market forces no longer apply. D) At equilibrium, scarcity is eliminated. 2) At a product’s equilibrium price A) the product’s demand curve is the same as the product’s supply curve. B) the quantity of the product demanded is greater than the quantity of the product supplied. C) the quantity of the product demanded is less than the quantity of the product supplied. D) the product’s demand curve crosses the product’s supply curve. 3) 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? A) Graph B represents the market for original Picasso paintings and Graph A represents the market for designer jeans. B) Graph A represents the market for original Picasso paintings and Graph B represents the market for designer jeans. C) Graph A represents both the market for original Picasso paintings and designer jeans. D) Graph B represents both the market for original Picasso paintings and designer jeans. 4) 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) a surplus of oranges. B) the quantity demanded equal to the quantity supplied. C) a shortage of oranges. D) an increase in the demand for oranges. 5) Refer to Figure 3-4. If the price is $10, A) there would be a surplus of 600 units. B) there would be a shortage of 600 units. C) there would be a surplus of 200 units. D) there would be a shortage of 200 units. 6) Refer to Figure 3-4. At a price of $10, how many units will be sold? A) 200 B) 400 C) 600 D) 800 7) Refer to Figure 3-4. If the current market price is $10, the market will achieve equilibrium by A) a price increase, increasing the supply and decreasing the demand. B) a price decrease, decreasing the supply and increasing the demand. C) a price decrease, decreasing the quantity supplied and increasing the quantity demanded. D) a price increase, increasing the quantity supplied and decreasing the quantity demanded. 8) Refer to Figure 3-5. At a price of $15, A) there would be a surplus of 4 units. B) there would be a shortage of 2 units. C) there would be a surplus of 6 units. D) there would be a shortage of 4 units. 9) Refer to Figure 3-5. At a price of $5, the quantity sold A) is 2 units. B) is 4 units. C) is 6 units. D) cannot be determined. 10) Refer to Figure 3-5. In a free market such as that depicted above, a surplus is eliminated by A) a price increase, increasing the supply and decreasing the demand. B) a price decrease, decreasing the supply and increasing the demand. C) a price decrease, decreasing the quantity supplied and increasing the quantity demanded. D) a price increase, increasing the quantity supplied and decreasing the quantity demanded.