CHAPTER 3 - MARKET EQUILIBRIUM

New technology makes it possible for producers to produce more products at every given price level. What effect will this have on the equilibrium price and quantity in the industry

• Price decrease; Quantity decrease

• Price decrease; Quantity increase

• Price no change; Quantity no change

• Price increase; Quantity increase

When the market for a good is in equilibrium

• there will be a shortage of goods in the economy.

• quantity supplied equals quantity demanded.

• quantity supplied exceeds quantity demanded.

• quantity demanded exceeds quantity supplied.

The demand function for goods X is given as Qd = 750 - 2P and the supply function is Qs = 500 + 3P. Calculate the price of equilibrium for goods X.

When the price reduces to the equilibrium price, the problem of _____________ will be resolved

• surplus

• shortage

• excess demand

• unstable price

What is the meaning of 'Ceiling Price'?

• The government imposes a maximum price that prevents certain prices from rising above that price.

• The government sets a minimum price that prevents certain prices from falling below that price.

• The government provides incentives to the seller or producer to produce more goods

• The government imposes a certain amount to be produced by the seller or producer.

What is the effect on the equilibrium price and the quantity of chicken when there is a technological advancement in the fisheries industry?

• The price of chicken will increase and the equilibrium quantity of chicken will increase.

• The price of chicken will increase and the equilibrium quantity of chicken will decrease.

• The price of chicken will increase and the equilibrium quantity of chicken will not change.

• The price of chicken will not change and the equilibrium quantity of chicken will increase.

The increment in both demand and supply of goods in equal magnitude will results in ______________.

• increase of equilibrium price and quantity

• decrease of equilibrium price and quantity

• increase of equilibrium price and decreased equilibrium quantity

• the effect on equilibrium price is unchanged, but the equilibrium quantity will increase.

If a product is in shortage, we can conclude that its price

• is in the equilibrium price level.

• will fall in the near future.

• is below the equilibrium price level.

• is above the equilibrium price level.

Given the demand function is Qd = 200 - 5P and supply function is Qs = 100 + 5P. What is the quantity equilibrium?

A consequence of floor price is a persistent surplus of goods.

• True

• False