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In a market, if the price is lower than the equilibrium price, A. the quantity supplies exceeds the quantity demanded, so there is a surplus.

1.In a market, if the price is lower than the equilibrium price,

A. the quantity supplies exceeds the quantity demanded, so there is a surplus.

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B. the quantity supplied is less than the quantity demanded, so there is a shortage.

C. the quantity supplied equals the quantity demanded.

2.The supply curve

A. slopes downward because people buy more goods and services when their prices are lower.

B. slopes downward because people buy more goods and services when their prices are higher.

C. slopes upward because businesses devote more resources to production when prices are higher.

D. slopes upward because businesses devote more resources to production when prices are lower.

3. In a market, several businesses go bankrupt and stop producing a product. As a result,

A. demand increases, equilibrium price rises and equilibrium quantity rises.

B. demand decreases, equilibrium price falls and equilibrium quantity falls.

C. supply increases, equilibrium price falls and equilibrium quantity rises.

D. supply decreases, equilibrium price rises and equilibrium quantity falls.

4. The cost of raw materials that businesses use to produce a product decreases in a market. As a result,

A. demand increases, equilibrium price rises and equilibrium quantity rises.

B. demand decreases, equilibrium price falls and equilibrium quantity falls.

C. supply increases, equilibrium price falls and equilibrium quantity rises.

D. supply decreases, equilibrium price rises and equilibrium quantity falls.

5. The incomes of consumers increase in the market for an inferior good. As a result,

A. demand increases, equilibrium price rises and equilibrium quantity rises.

B. demand decreases, equilibrium price falls and equilibrium quantity falls.

C. supply increases, equilibrium price falls and equilibrium quantity rises.

D. supply decreases, equilibrium price rises and equilibrium quantity falls.

6. Demand is “inelastic” when

A. quantity changes a lot when price changes.

B. quantity changes only a little when price changes. 

7. Suppose a 10% increase in the price of gasoline causes a 3% decrease in gasoline sales. The elasticity of demand for gasoline is

A. -0.3

B. -3

C. -10

D. -30

8. Suppose a 20% decrease in the price of pianos causes a 30% increase in piano sales. The elasticity of demand for pianos is ___________________

 

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