Equilibrium Test Review Warm Up

In the Wheat Market Simulation, what was the relationship between the amount of wheat people wanted to buy and the price?

In the Wheat Market Simulation, what was the relationship between the amount of wheat              people wanted to sell and the price?

What is the market clearing price/ equilibrium for wheat?

In a market who determines the equilibrium price?

According to the law of demand:

            a. The lower the price, the more of the good businesses want to sell

            b. The higher the price, the more of the good businesses want to sell.

            c. The higher the price, the more of the good people want to buy.

            d. The lower the price, the more of the good people want to buy.

The equilibrium price is the price where:

            a. The amount of the good offered for sale is bought.

            b. There are more buyers than sellers.

            c. There are more sellers than buyers.

            d. The prices of all goods and services are equal.

What is consumer surplus?

            a. A price where there is a surplus of the good offered for sale

b. The difference between what the consumer is willing to pay for the good and the price        of the good

            c. A price where sellers are at a disadvantage

            d. A situation that occurs most often in a command economy

Demand Test Review Warm Up

Other things constant, which of the following would not cause a change in the demand(shift in the demand curve) for Coca Cola?

            a. A decrease in consumer incomes

            b. An increase in people’s tastes and preferences for Coca Cola

            c. A decrease in the price of Coca Cola

            d. An increase in the price of Pepsi Cola

“Rising oil prices have caused a sharp decrease in the demand for oil.” Speaking precisely, and using terms as they are defined by economists, choose the statement that best describes this quotation.

            a. The quotation is incorrect: An increase in price causes a decrease in the quantity                                 demanded, not a decrease in demand

            b. The quotation is incorrect: An increase in price causes an increase in the quantity                                demanded not a decrease in demand.

            c. The quotation is correct: An increase in price always causes a decrease in demand

d. The quotation is incorrect: An increase in price always causes an increase in demand,         not a decrease in demand.

“As the price of domestic automobiles has inched upward, customers have found foreign autos to be a better bargain.  Consequently, domestic auto sales have been decreasing, and foreign auto sales have been increasing.”  Using only the information in this quotation and assuming everything else constant, which of the following best describes this statement?

a. A movement along the demand curve for domestic autos, and a shift in the demand             curve for foreign autos

b. A shift in the demand curve for domestic autos, and a movement along the demand             curve for foreign autos

c. A shift in demand curves for both domestic and foreign automobiles

d. A movement along the demand curves for both foreign and domestic automobiles

The function of a market-clearing price is to;

            a.  Encourage technological improvement

            b.  Ensure that sellers earn profits

            c.  Distribute income equally

            d.  Equate quantity demanded with quantity supplied

The discovery of oil in Mexico;

            a. Decreased the oil demand.

            b. Increased the oil demand

            c. Decreased the oil supply.

            d. Increased the oil supply.

Price Ceiling and Floor Shortages Surplus Warm Up

A shortage of new DVD players has occurred in the stores during the Christmas shopping season.  All companies set their prices before the Christmas season begins.  What explains the shortage?

            a. The price of DVD players was set at the same level as the market-clearing price.

b. The IQ of the manager who set the price of the DVD players was lower than the           market-clearing price.

c. The price of DVD players was set higher than the market-clearing price.

d. The price of DVD players was set lower than the market-clearing price.

During dry years, many cities experience water shortages and encourage citizens to conserve on water, reducing water usage for lawns, showers, and washing clothes and cars.  What might be an alternative way to help reduce the water shortage problem during a drought?

            a. Raise the price of water to the market-clearing price

            b. Drop the price of water below market-clearing price

            c. Raise the price of water above the market-clearing price

            d. Raise the price of bottled water sold in the grocery stores

Most airports charge airplanes a landing fee for using the airport runways.  What would happen if airports charged all airplanes the same fee and did not change the fee for several years?

            a. Airports would see a decrease in the little airplanes using the facilities

            b. Airports would soon be empty

            c. Airports would get very crowded, with many airplanes using the facilities

            d. Airports would see a decrease in big airplanes using the facilities

What happens to sales if a price ceiling is set at $5.00/ lb. & equilibrium is $7.00/lb?        

What happens to workers available in work force if a price floor is set at $8.00/hr. & equilibrium is $6.00/hr?