1. Demand, supply, and Market equilibrium
Chapter 3
Demand, supply, and Market equilibrium

2. Taylor Economics – Chapter 3
1. The law of demand is illustrated by a demand curve that is:
Vertical
Horizontal
Upward sloping
Downward sloping
Source: Ch 1, Micro Test Bank, #2
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3. Taylor Economics – Chapter 3
1. The law of demand is illustrated by a demand curve that is:
Vertical
Horizontal
Upward sloping
Downward sloping
Source: Ch 1, Micro Test Bank, #2
Copyright © Houghton Mifflin Company. All rights reserved.

4. Taylor Economics – Chapter 3
2. Which would cause a decrease in the quantity of computers supplied?
An increase in the demand for computers
A decrease in the demand for computers
An increase in the incomes of consumers
A decrease in the price of parts for making computers
Source: Ch 1, Micro Test Bank, #2
Copyright © Houghton Mifflin Company. All rights reserved.

5. Taylor Economics – Chapter 3
2. Which would cause a decrease in the quantity of computers supplied?
An increase in the demand for computers
A decrease in the demand for computers
An increase in the incomes of consumers
A decrease in the price of parts for making computers
Source: Ch 1, Micro Test Bank, #2
Copyright © Houghton Mifflin Company. All rights reserved.

6. Taylor Economics – Chapter 3
3. When the price of oil declines significantly, the price of gasoline also declines. The latter occurs because of a(n):
increase in the demand for gasoline.
decrease in the demand for gasoline.
increase in the supply of gasoline.
decrease in the supply of gasoline.
Source: Ch 1, Micro Test Bank, #2
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7. Taylor Economics – Chapter 3
3. When the price of oil declines significantly, the price of gasoline also declines. The latter occurs because of a(n):
increase in the demand for gasoline.
decrease in the demand for gasoline.
increase in the supply of gasoline.
decrease in the supply of gasoline.
Source: Ch 1, Micro Test Bank, #2
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8. Taylor Economics – Chapter 3
4. A schedule which shows the various amounts of a product producers are willing and able to produce at each price in a series of possible prices during a specified period of time is called:
Quantity supplied
Quantity demanded
Supply
Demand
Source: Ch 1, Micro Test Bank, #2
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9. Taylor Economics – Chapter 3
4. A schedule which shows the various amounts of a product producers are willing and able to produce at each price in a series of possible prices during a specified period of time is called:
Quantity supplied
Quantity demanded
Supply
Demand
Source: Ch 1, Micro Test Bank, #2
Copyright © Houghton Mifflin Company. All rights reserved.

10. Taylor Economics – Chapter 3
5. If the quantity supplied of a product is less than the quantity demanded, then:
There is a shortage of the product
There is a surplus of the product
The product is a normal good
The product is an inferior good
Source: Ch 1, Micro Test Bank, #2
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11. Taylor Economics – Chapter 3
5. If the quantity supplied of a product is less than the quantity demanded, then:
There is a shortage of the product
There is a surplus of the product
The product is a normal good
The product is an inferior good
Source: Ch 1, Micro Test Bank, #2
Copyright © Houghton Mifflin Company. All rights reserved.

12. Taylor Economics – Chapter 3
6. If the market price is above the equilibrium price:
A shortage will occur and producers will produce more and lower prices
A surplus will occur and producers will produce less and lower prices
A surplus will result and consumers will bid prices up
Producers will make extremely high profits
Source: Ch 1, Micro Test Bank, #2
Copyright © Houghton Mifflin Company. All rights reserved.

13. Taylor Economics – Chapter 3
6. If the market price is above the equilibrium price:
A shortage will occur and producers will produce more and lower prices
A surplus will occur and producers will produce less and lower prices
A surplus will result and consumers will bid prices up
Producers will make extremely high profits
Source: Ch 1, Micro Test Bank, #2
Copyright © Houghton Mifflin Company. All rights reserved.

14. Taylor Economics – Chapter 3
7. A competitive market will:
achieve an equilibrium price.
produce shortages.
produce surpluses.
create disorder.
Source: Ch 1, Micro Test Bank, #2
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15. Taylor Economics – Chapter 3
7. A competitive market will:
achieve an equilibrium price.
produce shortages.
produce surpluses.
create disorder.
Source: Ch 1, Micro Test Bank, #2
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16. Taylor Economics – Chapter 3
8. A product market is in equilibrium:
when there is no surplus of the product.
when there is no shortage of the product.
when consumers want to buy more of the product than producers offer for sale.
where the demand and supply curves intersect.
Source: Ch 1, Micro Test Bank, #2
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17. Taylor Economics – Chapter 3
8. Households and businesses are:
both buyers in the resource market.
both sellers in the product market.
sellers in the resource and product markets respectively.
sellers in the product and resource markets respectively.
Source: Ch 1, Micro Test Bank, #2
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18. Taylor Economics – Chapter 3
9. A headline reads "Storms destroy half of the lettuce crop." This situation would lead to a(n):
Increase in the price of lettuce and quantity purchased
Decrease in the price of lettuce and quantity purchased
Increase in the price of lettuce and decrease in quantity purchased
Decrease in the price of lettuce and increase in quantity purchased
Source: Ch 1, Micro Test Bank, #2
Copyright © Houghton Mifflin Company. All rights reserved.

19. Taylor Economics – Chapter 3
9. A headline reads "Storms destroy half of the lettuce crop." This situation would lead to a(n):
Increase in the price of lettuce and quantity purchased
Decrease in the price of lettuce and quantity purchased
Increase in the price of lettuce and decrease in quantity purchased
Decrease in the price of lettuce and increase in quantity purchased
Source: Ch 1, Micro Test Bank, #2
Copyright © Houghton Mifflin Company. All rights reserved.

20. Taylor Economics – Chapter 3
10. Government-set price floors and price ceilings:
Do not affect the rationing function of price in a free market
Interfere with the rationing function of price in a free market
Result in surpluses of products in markets where they are used
Result in shortages of products in markets where they are used
Source: Ch 1, Micro Test Bank, #2
Copyright © Houghton Mifflin Company. All rights reserved.

21. Taylor Economics – Chapter 3
10. Government-set price floors and price ceilings:
Do not affect the rationing function of price in a free market
Interfere with the rationing function of price in a free market
Result in surpluses of products in markets where they are used
Result in shortages of products in markets where they are used
Source: Ch 1, Micro Test Bank, #2
Copyright © Houghton Mifflin Company. All rights reserved.