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Chapter 6 Practice Test               Hit Counter

True/False
Indicate whether the statement is true or false.
 

 1. 
Equilibrium exists in all markets, all the time.
 

 2. 
If you observe extremely long lines to purchase tickets for an event, you would conclude that the ticket office has calculated the equilibrium price perfectly.
 

 3. 
Decision makers in Washington, D.C., decide how much corn and wheat will be grown in the United States.
 

 4. 
Restaurant servers frequently earn minimum wage because there is low demand for them.
 

 5. 
Supply and demand go together to determine price.
 

 6. 
If a shortage exists, sellers are likely to raise the price of the good.
 

 7. 
When a surplus occurs, producers will not be able to sell all they had hoped to sell.
 

 8. 
Since the number of seats available in Yankee Stadium is the same for all games, we could expect prices for tickets to all games to be the same.
 

 9. 
A price ceiling is a legislated maximum price that is above the equilibrium price.
 

 10. 
Although similar in style and size, houses in different geographic locations often sell at prices differing in the hundreds of thousands of dollars.
 

 11. 
An auction would be a good way to describe markets in the United States.
 

 12. 
It is possible for price to change without a change in supply or demand.
 

 13. 
Sellers who notice that buyers want to purchase less of the seller’s good will usually raise the price to make up the difference.
 

 14. 
Sellers in the marketplace adjust their prices, reaching equilibrium through trial and error in response to buyers’ preferences.
 

 15. 
Price directs the allocation of resources away from some goods, toward others.
 

 16. 
An unintended effect of a price floor could be a surplus.
 

 17. 
Price controls bring about more exchange than would exist without them.
 

 18. 
The reason that there are small lines at supermarkets and long lines for concerts is that concerts are more popular than supermarkets.
 

 19. 
Scalpers would not exist if the good were not originally sold at its equilibrium price.
 

Multiple Choice
Identify the choice that best completes the statement or answers the question.
 

 20. 
Equilibrium price is
a.
any price that doesn’t cause a surplus.
b.
any price that doesn’t cause a shortage.
c.
the price that occurs when the quantity demanded is equal to the quantity supplied.
d.
any price that sellers decide to set.
 

 21. 
Which of the following is true when there is a shortage in the market?
a.
Prices may rise.
b.
Prices may fall.
c.
Prices stay the same and producers cut production.
d.
The market is in equilibrium.
 

 22. 
If all else remains the same, a decrease in the demand for a good
a.
will increase sales.
c.
will decrease the price.
b.
will increase the price.
d.
will cause a shortage.
 

 23. 
If a greater supply of labor were combined with decreased demand for labor, we might expect
a.
wages to rise.
c.
wages to remain the same.
b.
wages to fall.
d.
None of the above
 

 24. 
In a free enterprise market, who or what allocates resources?
a.
producers
c.
prices
b.
consumers
d.
the government
 

 25. 
If there were a shortage of nurses, we would expect
a.
the wages of nurses to increase.
c.
a decreased demand for nurses.
b.
the wages of nurses to decrease.
d.
None of the above
 

 26. 
Inventory includes which of the following?
a.
supply and demand
c.
stock on hand
b.
total sales
d.
quantity sold multiplied by price
 

 27. 
Equilibrium can be expressed as
a.
Qs > Qd.
c.
Qd = Qs.
b.
Qd > Qs.
d.
Qd < Qs.
 

 28. 
Price controls
a.
decrease the amount of exchange that occurs.
b.
increase the amount of exchange that occurs.
c.
don’t really have an impact on exchange.
d.
increase the opportunities people have to make themselves better off.
 

 29. 
A price floor results in
a.
a shortage.
c.
equilibrium.
b.
a surplus.
d.
a shift of the curve.
 

 30. 
A legal maximum price at which a good can be sold is a
a.
price subsidy.
c.
price floor.
b.
price ceiling.
d.
equilibrium price.
 

 31. 
At the equilibrium price, which of the following is true?
a.
Buyers and sellers are satisfied.
b.
Buyers have bought everything they wanted buy.
c.
Sellers have sold everything they wanted to sell.
d.
All of the above
 

 32. 
When there is a surplus in the market, which of the following is true?
a.
Prices may rise.
b.
Prices may fall.
c.
Prices stay the same and producers increase production.
d.
The market is in equilibrium.
 
 
Use these four graphs to answer the following questions.

Changes in the Equilibrium Price
nar001-1.jpg
 

 33. 
Which graph illustrates what would happen if candy producers are informed that the cost of sugar has doubled?
a.
graph a
c.
graph c
b.
graph b
d.
graph d
 

 34. 
Which graph reflects the impact on the market for drinking water as the result of a hurricane that hits Florida?
a.
graph a
c.
graph c
b.
graph b
d.
graph d
 

 35. 
Which graph reflects the impact on the market for homes as new construction companies build houses in Houston, Texas?
a.
graph a
c.
graph c
b.
graph b
d.
graph d
 

 36. 
Which graph reflects the impact on the market for VCRs as consumers purchase more and more DVDs?
a.
graph a
c.
graph c
b.
graph b
d.
graph d
 

 37. 
In which two of the graphs did a shortage occur because of the shift in demand or supply?
a.
graphs a and b
c.
graphs b and c
b.
graphs a and d
d.
graphs b and d
 

 38. 
In which two of the graphs did a surplus occur because of the shift in demand or supply?
a.
graphs a and b
c.
graphs b and c
b.
graphs a and d
d.
graphs b and d
 
 
nar002-1.jpg
 

 39. 
In the accompanying graph, which area shows a surplus?
a.
area 1
c.
area 3
b.
area 2
d.
area 4
 

 40. 
In the accompanying graph, which area shows a shortage?
a.
area 1
c.
area 3
b.
area 2
d.
area 4
 



 
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