PEAI313

What happens when there is an increase in demand for a product, assuming the supply remains constant?

• The equilibrium price will decrease.

• The equilibrium quantity will decrease.

• The equilibrium price will increase.

• The supply curve will shift to the left.

If the price of a substitute good increases, what is likely to happen to the demand for the original good?

• Demand will increase.

• Demand will decrease.

• Demand will remain unchanged.

• Supply will decrease.

  
  

Which of the following is true if the market price is above the equilibrium price?

• There will be a shortage of the good.

• There will be a surplus of the good.

• The demand curve will shift to the right.

• The supply curve will shift to the left.

What is the impact on the equilibrium price and quantity if there is an improvement in technology that reduces production costs?

• Price increases, quantity increases.

• Price decreases, quantity increases.

• Price increases, quantity decreases.

• Price decreases, quantity decreases.

If both demand and supply increase simultaneously, what can be said about the equilibrium quantity and price?

• Quantity will increase, price will definitely increase.

• Quantity will decrease, price will definitely increase.

• Quantity will increase, but price could increase, decrease, or remain the same.

• Quantity will decrease, but price could increase, decrease, or remain the same.

What is the consumer surplus in a market?

• The total amount paid by consumers for a good.

• The difference between what consumers are willing to pay and what they actually pay.

• The difference between the supply and demand curves.

• The profit earned by producers.

Which of the following will cause a movement along the demand curve for a product?

• A change in consumer income.

• A change in the price of the product.

• A change in the price of a complementary good.

• A change in consumer preferences.

What does market efficiency refer to?

• The ability of a market to produce goods and services at the lowest possible cost.

• The ability of a market to allocate resources such that total surplus (consumer plus producer surplus) is maximized.

• The ability of a market to eliminate all waste and maximize profits.

• The ability of a market to produce a large quantity of goods.

If a price ceiling is set below the equilibrium price, what will be the likely outcome?

• A surplus will occur.

• A shortage will occur.

• The quantity demanded will equal the quantity supplied.

• The market will clear efficiently.

Which of the following best describes a perfectly competitive market?

• A market with a single seller who controls the price.

• A market where firms produce identical products, and no single firm can influence the market price.

• A market where firms differentiate their products and have some control over pricing.

• A market where government regulations dictate prices.