Lesson 5 - Relationship between Demand and Supply

An increase in demand will lead to ..............................

• A higher equilibrium price and output

• A lower equilibrium price and output

• A lower equilibrium price and higher output

• A higher equilibrium price and lower output

An increase in customers' income will result in ................................ for the market of luxury hotel rooms.

• A higher equilibrium price and lower output

• A lower equilibrium price and higher output

• A higher equilibrium price and output

• A lower equilibrium price and output

A reduction in the costs of production will lead to ................................

• a higher equilibrium price and output

• a higher equilibrium price and lower output

• a lower equilibrium price and output

• a lower equilibrium price and higher output

A famous film star wears a watch in her latest movie. What is the impact on the equilibrium price and output of the watch market?

• A lower equilibrium price and higher output

• A higher equilibrium price and output

• A higher equilibrium price and lower output

• A lower equilibrium price and output

Because the market for homestay is profitable, many suppliers join the market. What is the result for this market?

• A lower equilibrium price and output

• A lower equilibrium price and higher output

• A higher equilibrium price and output

• A higher equilibrium price and lower output

A hurricane damages the cotton crop. What are the effects for the market of sweatshirts?

• A higher equilibrium price and output

• A lower equilibrium price and output

• A higher equilibrium price and lower output

• A lower equilibrium price and higher output

If the actual price is higher than the equilibrium price, there will be a ............................

• shortage

• surplus

If the actual price is lower than the equilibrium price, there will be a .........................

• shortage

• surplus

The equilibrium price is $10. If the government sets the price ceiling of $8, what is the actual price?

• $10

• $8

• $9

The equilibrium price is $10. If the government sets a price floor of $12, there will be a ..........................

• surplus

• shortage