Sample Quiz
Multiple Choice
1. Equilibrium
a. is a concept unique to economics.
b. always occurs where supply equals demand.
c. results when opposing forces fail to cancel each other out.
d. indicates balance.
e. all of the above
2. In the supply and demand model, equilibrium occurs when
a. all buyers and sellers are satisfied with their respective quantities at the market price.
b. supply and demand intersect.
c. quantity supplied equals quantity demanded.
d. the price has no tendency to change.
e. all of the above
3. A price above equilibrium price will lead to a(n)
a. surplus.
b. shortage.
c. excess demand.
d. price increase.
e. none of the above
4. To have an effect on a market, a price ceiling must
a. be above equilibrium.
b. be equal to equilibrium.
c. be below equilibrium.
d. result in a surplus.
e. none of the above
5. The socially optimal quantity maximizes
a. economic surplus.
b. producer surplus.
c. consumer surplus.
d. quantity demanded.
e. quantity supplied.
6. When is it not possible for individuals to arrange a transaction that creates additional economic surplus? When
a. price is above equilibrium.
b. price is below equilibrium.
c. price is at equilibrium.
d. there is a shortage.
e. there is a surplus.
7. When a firm pollutes,
a. markets will be efficient.
b. the output level is socially optimal.
c. the Smart-For-One-is-Sometimes-Dumb-for-All Principle does not hold.
d. the output level is above the socially optimal level.
e. the output level is below the socially optimal level.
8. An increase in price will
a. decrease demand.
b. decrease quantity demanded.
c. increase demand.
d. increase quantity demanded.
e. not affect quantity demanded.
9. An increase in the price of a complement will
a. decrease demand.
b. decrease quantity demanded.
c. increase demand.
d. increase quantity demanded.
e. not affect quantity demanded.
10. If an increase in income leads to a decrease in the demand for a good, the good is a(n)
a. substitute good.
b. complementary good.
c. inferior good.
d. normal good.
e. superior good.
Problems/Short Answer
1. Refer to the graph of the housing market provided to answer the following questions.
Monthly Rent supply
1000
800
600
demand
30 50 70 Quantity
(thousands of apartments per month)
a. What are the equilibrium rent and quantity of housing in this market if it is unregulated?
b. If rent in this market is controlled at $600, what quantity of housing will be demanded?
c. If rent in this market is controlled at $600, what quantity of housing will be supplied?
d. If rent in this market is controlled at $1,000, what quantity of housing will be demanded?
e. If rent in this market is controlled at $1,000, what quantity of housing will be supplied?
f. What difficulties might arise in this market for housing if an effective rent control policy is enacted?
2. Graph the effect on equilibrium price and quantity in the market for doctors' services as the average age of the population increases.