Name:

Class:

G8 Economics
Equilibrium – Practice 2
Aaron Girona
1. Which of the following statements is true?
A. A surplus occurs when quantity demanded is greater than quantity supplied and price
is above its equilibrium level.
B. A shortage occurs when quantity demanded is greater than quantity supplied and
price is above its equilibrium level.
C. A surplus occurs when quantity supplied is greater than quantity demanded and price
is above its equilibrium level.
D. A shortage occurs when quantity supplied is greater than quantity demanded and
price is below its equilibrium level.

2. When the demand for a good or service increases, the result is which of the following?
A. Equilibrium price decreases and quantity increases
B. Equilibrium price increases and quantity decreases
C. Equilibrium price and quantity both decrease
D. Equilibrium price increases and quantity increases

3. When demand decreases and supply increases at the same time, what do we know is true?
A. Equilibrium price rises and quantity decreases
B. Equilibrium price decreases and quantity change is indeterminate
C. Equilibrium quantity increases and price is indeterminate
D. Equilibrium price and quantity stay the same
E. Equilibrium price and quantity always rise

4. If the supply for PS5 decreases, what will happen with the price and quantity of PS5?
A. Both Increase
B. Both Decrease
C. Price Increases and Quantity Decreases
D. Price Decreases and Quantity Increases
Practice graphing the following changes to markets. First, draw a graph that shows a market in
equilibrium. Then show the appropriate changes to your graphs, given the following situations.
State the effect on price from the changes to that market.
1. The peach pie market is in equilibrium at $5 and 700,000. Show and label the equilibrium in this
market.

2. The price of books has decreased greatly from equilibrium of $8 to $4 each. Graph the change. What
happens to QS and QD of books?

3. The quantity supplied of comic books is much greater than the quantity demanded for comic books.
Show and explain this on your model. What will happen to the price of comic books?
For each of the following, draw and label a market in equilibrium for books. Show what
happens given the following changes. State what happens to equilibrium price and quantity
and the give the reason for the change.

1. The government provides a per book subsidy to companies producing physical copies of textbooks.

P____ Q____

2. Due to a world-wide drought the price of wood used to produce paper increases 20%.

P____Q____

3. Studies show that students who read physical copies of textbook perform better on tests.

P____Q____
4. There is an enormous rise in the popularity of ‘e-readers’ over physical books.

P____Q____

Simultaneous Shifts

1. Draw two market graphs side by side. In graph A, both supply and demand increase. In graph
B, supply increases, and demand decreases. What happens to the new equilibrium price and
quantity in both graphs?
 Remember
Demand increases/Shifts to the Demand decreases/Shifts to the
right if: left if:

• The number of • The number of

consumers increases
• The price of a substitute
increases
• The price of a
complement decreases
• Our income increase
(normal goods)
consumers decreases
• The price of a substitute
decreases
• The price of a
complement increase
• Our income decrease
(normal goods)
Supply increases/Shifts to the right
if:
• The number of
producers increases.
• The price of a related
product decreases.
• The price of the input
decreases.
• Technology Increases.
Supply decreases/Shifts to the
left if:
• The number of
producers decreases.
• The price of a related
product increases.
• The price of the input
increases.
• Technology Decreases.