Tutorial 1

MCQ MARKET EQUILIBRIUM

Student Name:

Matrix No:
Total questions:
Lecturer name: Subashini Paniselvam

1. When the quantity demanded equals quantity supplied

a) none of the above b) there is a shortage.

c) the government must be intervening in the market. d) there is a surplus.

2. When the price is below the equilibrium price, the quantity demanded

a) exceeds the equilibrium quantity. The quantity supplied is less

b) is less than the equilibrium quantity. So is the quantity
than the equilibrium quantity.
supplied.

c) is less than the equilibrium quantity. The quantity supplied

d) exceeds the equilibrium quantity. So does the quantity
exceeds the equilibrium quantity.
supplied.

3. A price below the equilibrium price results in

a) a surplus. b) a further price fall.

c) excess supply. d) a shortage.

4. If the quantity demanded exceeds the quantity supplied, then there is

a) a surplus and the price is above the equilibrium price. b) a shortage and the price is above the equilibrium price.

c) a surplus and the price is below the equilibrium price. d) a shortage and the price is below the equilibrium price.

5. If the quantity supplied exceeds the quantity demanded, then there is

a) a surplus and the price is below the equilibrium price. b) a shortage and the price is above the equilibrium price.

c) a surplus and the price is above the equilibrium price. d) a shortage and the price is below the equilibrium price.
6.

The equilibrium price in the above figure is

a) $4 b) $6

c) $8 d) $2

7.

The equilibrium quantity in the above figure is

a) 200 units. b) 400 units.

c) 600 units d) 300 units.

8.

At a price of $10 in the above figure, there is

a) a shortage of 400 units. b) a surplus of 400 units.

c) a shortage of 200 units. d) a surplus of 200 units.

9.

At a price of $4 in the above figure,

a) the quantity supplied is 400 units. b) the equilibrium quantity is 400 units

c) there is a surplus of 200 units. d) there is a shortage of 200 units

10.

If the good in the above figure is a normal good and income rises, then the new equilibrium quantity

a) is less than 300 units. b) could be less than, equal to, or more than 300 units.

c) is more than 300 units. d) is 300 units.

11.

The initial supply and demand curves for a good are illustrated in the above figure. If there are technological advances in the production
of the good, then the new price for the good

a) is $6. b) is more than $6.

c) is less than $6. d) could be less than, equal to, or more than $6.
12. In the market of newspapers, if journalists salaries go up then

a) equilibrium price and equilibrium quantity go up b) no change

c) there is a rise in equilibrium price and a fall in equilibrium

d) there is a rise in equilibrium quantity and a fall in equilibrium
quantity
price

13.

The demand and supply curves shown in the diagram below represent which of the following changes?

a) an increase in the quantity demanded and an increase in

b) a decrease in demand and a decrease in the equilibrium price
supply

c) an increase in the supply and an increase in the equilibrium price

d) a decrease in demand and a decrease in the quantity
supplied

e) an increase in demand and an increase in the equilibrium price

14.

Refer to the figure below. Which of the graphs best describes the impact of a decrease in the wages and input prices that firms must pay in
order to produce output?

a) D b) B

c) A d) C
15.

Refer to the figure below. After the increase in demand, at the initial price of $8, there is now

a) equilibrium. b) excess quantity demanded.

c) a tendency for price to decrease. d) excess quantity supplied.

16.

Refer to the figure below. Which graph shows an increase in demand?

a) C b) A

c) B d) D
17.

The price of vanilla beans has been bouncing around a lot. Using the information below, we can explain the bouncing price of vanilla in
the context of the supply and demand model.
“The 2000 cyclone that hit Madagascar, the world’s leading producer, destroyed that year’s crop and a large share of the vines that produce
vanilla beans. But then, in the following years, the vines in Madagascar were replanted, and other countries, including India, Papua New
Guinea, Uganda, and Costa Rica, entered the vanilla market. This entry was facilitated by the development of a sun-tolerant variety of the
vanilla plant that allows it to be grown as a plantation crop.” Refer to the figure below.

The return of Madagascar to the industry, technological advances, and the entry of other countries in the vanilla market is best represented
by

a) the upward shift of the supply curve, from Supply1 to

b) the rightward shift of the supply curve, from Supply3 to
Supply3, and higher prices
Supply2, and lower prices

c) the move of the supply curve, from Supply1 to Supply2, then

d) the move along the demand curve, from point a to point b
over to Supply3

18. Equilibrium in the fish market is disturbed by two

different events: (1) a report by the American Medical
Association announces that increased consumption of
fish is associated with lower heart
disease, and (2) fishermen are banned from fishing in environmentally sensitive areas that previously were
important sources for their catch. In the
market for fish,

a) both equilibrium price and quantity

b) equilibrium price will increase but we don’t
will decrease.
have enough information to determine the
change in equilibrium output.

c) equilibrium price will increase and equilibrium

d) both equilibrium price and quantity will increase
quantity will decrease.