Master Market Equilibrium: Interactive Quizzes for Economics Students

Question 1

Which of the following factors will NOT shift the demand curve for a good?

Accepted Answer

A change in the number of suppliers

Answer

A change in consumer tastes and preferences

Answer

A change in consumer income

Answer

A change in the price of a substitute good

Question 2

If the supply curve for a good is upward sloping, an increase in the equilibrium price will result in:

Accepted Answer

An increase in quantity supplied.

Answer

A decrease in quantity supplied.

Answer

No change in quantity supplied.

Answer

An indeterminate change in quantity supplied.

Question 3

In a competitive market, how would a technological innovation that reduces production costs affect equilibrium?

Accepted Answer

Increase quantity supplied and decrease equilibrium price.

Answer

Decrease quantity supplied and increase equilibrium price.

Answer

Increase both quantity supplied and equilibrium price.

Answer

Decrease both quantity supplied and equilibrium price.

Question 4

What is the main reason why a price floor set above the equilibrium price is likely to create a surplus?

Accepted Answer

Producers are incentivized to produce more than consumers are willing to buy at the higher price.

Answer

Consumers are discouraged from buying the good due to the higher price.

Answer

The government intervenes to buy the excess supply.

Answer

The price ceiling creates a shortage, which leads to a surplus.

Question 5

How does a government subsidy to producers affect the market for a good?

Accepted Answer

Shifts the supply curve to the right, increasing quantity supplied.

Answer

Shifts the supply curve to the left, decreasing quantity supplied.

Answer

Shifts the demand curve to the right, increasing demand.

Answer

Shifts the demand curve to the left, decreasing demand.

Question 6

In a perfectly competitive market, which two curves determine the equilibrium price?

Accepted Answer

Demand curve and supply curve

Answer

Demand curve and total cost curve

Answer

Marginal cost curve and marginal revenue curve

Question 7

What is the effect of an increase in the supply of a good or service on the equilibrium quantity and price?

Accepted Answer

Equilibrium quantity increases, and equilibrium price decreases

Answer

Equilibrium quantity decreases, and equilibrium price increases

Answer

Equilibrium quantity and price remain constant

Answer

Equilibrium price increases, and equilibrium quantity decreases

Question 8

What is the primary function of the equilibrium price in a market?

Accepted Answer

To balance the quantity supplied and the quantity demanded

Answer

To maximize producer profits

Answer

To minimize consumer surplus

Answer

To increase market inefficiency

Question 9

What is the relationship between consumer surplus and producer surplus in a market?

Accepted Answer

They can be either equal or unequal, depending on market conditions

Answer

They are always equal

Answer

They are always unequal

Answer

The relationship is indeterminate

Question 10

Predict how a change in consumer preferences toward a normal good will affect its equilibrium price and quantity.

Accepted Answer

Increase in both price and quantity

Answer

Decrease in both price and quantity

Answer

Increase in price and decrease in quantity

Answer

Decrease in price and increase in quantity

Question 11

How does a tax on a good or service affect the equilibrium price and quantity in a market?

Accepted Answer

Increases equilibrium price and decreases equilibrium quantity

Answer

Decreases equilibrium price and increases equilibrium quantity

Answer

Increases both equilibrium price and quantity

Answer

Decreases both equilibrium price and quantity

Question 12

In a perfectly competitive market, what can be concluded about the market when the price is at equilibrium?

Accepted Answer

There is no shortage or surplus of the good or service.

Answer

Consumers are willing to pay more for the good than producers are willing to sell it for.

Answer

There is a shortage of the good or service.

Question 13

When demand for a product is inelastic, what happens to the quantity demanded if the price increases?

Accepted Answer

Changes minimally

Answer

Increases significantly

Answer

Decreases significantly

Answer

Cannot be predicted

Question 14

Which is NOT an advantage of market equilibrium?

Accepted Answer

Guarantee of the lowest possible prices

Answer

Efficient resource allocation

Answer

Prevention of market shortages or surpluses

Answer

Promotion of innovation and competition

Question 15

Which market structure is most likely to exhibit equilibrium?

Accepted Answer

Market with perfect competition and no barriers to entry or exit

Answer

Newly established market with limited buyers and sellers

Answer

Market controlled by a monopoly

Answer

Market with government price controls

Question 16

Which factor leads to a leftward shift of the supply curve?

Accepted Answer

Increase in production costs

Answer

Advancements in technology

Answer

Growing demand

Answer

Government incentives

Question 17

What is the likely outcome when a price ceiling is set below the equilibrium price?

Accepted Answer

Excess demand

Answer

Excess supply

Answer

Unchanged market conditions

Answer

Market surplus

Question 18

In a market equilibrium, the quantity supplied:

Accepted Answer

Is equal to the quantity demanded

Answer

Is consistently higher than the quantity demanded

Answer

Is consistently lower than the quantity demanded

Answer

Varies unpredictably

Question 19

Which of the following is NOT a necessary condition for market efficiency?

Accepted Answer

Equal income distribution among all individuals

Answer

Perfect information available to all market participants

Answer

The absence of externalities

Answer

No government intervention

Question 20

A price ceiling set below the equilibrium price will:

Accepted Answer

Create a shortage of the good

Answer

Create a surplus of the good

Answer

Have no effect on the market

Answer

Increase the quantity supplied

Question 21

The elasticity of supply measures:

Accepted Answer

The responsiveness of quantity supplied to changes in price

Answer

The responsiveness of quantity demanded to changes in price

Answer

The responsiveness of price to changes in quantity supplied

Answer

The responsiveness of price to changes in quantity demanded

Question 22

A government subsidy provided to producers will:

Accepted Answer

Shift the supply curve to the right

Answer

Shift the demand curve to the left

Answer

Increase the equilibrium price

Answer

Decrease the equilibrium quantity

Question 23

Which of the following is NOT a factor that can shift the supply curve?

Accepted Answer

Increase in consumer demand

Answer

Technological advancement

Answer

Change in input prices

Answer

Fiscal policy

Question 24

At the equilibrium point in a perfectly competitive market, which of the following equations hold true?

Accepted Answer

Qd = Qs

Answer

Qd > Qs

Answer

Qs > Qd

Answer

Qd + Qs = 0

Question 25

A market is considered to be in surplus when:

Accepted Answer

Qs > Qd

Answer

Qd > Qs

Answer

Qd = Qs

Answer

Qd < Qs

Question 26

Which of the following is a key benefit of achieving market equilibrium?

Accepted Answer

Price stability

Answer

Consumer protection

Answer

Increased market volatility

Answer

Reduced competition

Question 27

The demand curve for a normal good is generally expected to have which of the following slopes?

Accepted Answer

Positive

Answer

Negative

Answer

Zero

Answer

Indeterminate

Question 28

Which of the following is NOT a determinant of market demand?

Accepted Answer

Interest rates

Answer

Consumer preferences

Answer

Income

Answer

Prices of related goods

Question 29

Which of the following is a key assumption of the perfectly competitive market model?

Accepted Answer

Price-taking firms

Answer

Perfect information

Answer

Barriers to entry and exit

Answer

Irrational consumer behavior

Question 30

In a perfectly competitive market, if the price of a good is initially above equilibrium, what will happen over time?

Accepted Answer

Quantity supplied will increase, and quantity demanded will decrease.

Answer

Quantity demanded will increase, and quantity supplied will decrease.

Answer

Both quantity supplied and demanded will increase.

Answer

Both quantity supplied and demanded will decrease.

Question 31

In a market experiencing a surplus, what is the relationship between quantity supplied and quantity demanded?

Accepted Answer

Quantity supplied exceeds quantity demanded.

Answer

Quantity demanded exceeds quantity supplied.

Answer

Quantity supplied equals quantity demanded.

Answer

Quantity supplied is infinite.

Question 32

What is a key characteristic of the equilibrium price?

Accepted Answer

Quantity supplied equals quantity demanded.

Answer

Total revenue is maximized.

Answer

Consumer surplus is maximized.

Answer

Producer surplus is maximized.

Question 33

How does a price ceiling below the equilibrium price impact market efficiency?

Accepted Answer

Creates a shortage

Answer

Creates a surplus

Answer

Has no effect on efficiency

Answer

Increases both consumer and producer surplus

Question 34

Which of the following is NOT considered an advantage of market equilibrium?

Accepted Answer

Equitable wealth distribution

Answer

Efficient resource allocation

Answer

Stable prices

Answer

Consumer protection

Question 35

How does an increase in demand affect equilibrium price and quantity?

Accepted Answer

Equilibrium price increases, equilibrium quantity increases

Answer

Equilibrium price decreases, equilibrium quantity increases

Answer

Equilibrium price increases, equilibrium quantity decreases

Answer

Equilibrium price decreases, equilibrium quantity decreases

Question 36

Which of the following is NOT a characteristic of market disequilibrium?

Accepted Answer

Stable prices

Answer

Excess demand

Answer

Excess supply

Answer

Movement towards equilibrium

Question 37

Define market efficiency and explain its relationship to market equilibrium.

Accepted Answer

Market efficiency occurs when equilibrium price and quantity maximize consumer and producer welfare.

Answer

Market efficiency is achieved when the government fixes the price and quantity.

Answer

Market equilibrium has no connection to market efficiency.

Answer

Market efficiency is solely dependent on consumer behavior.

Question 38

Analyze the effects of a price ceiling set below the equilibrium price.

Accepted Answer

Excess demand and potential shortages

Answer

Excess supply and potential surpluses

Answer

No significant impact on the market

Answer

Increased prices and market inefficiencies

Question 39

Distinguish between a market in equilibrium and a market in disequilibrium.

Accepted Answer

In equilibrium, quantity supplied equals quantity demanded, while in disequilibrium, they differ.

Answer

In equilibrium, price is at its lowest, while in disequilibrium, it is at its highest.

Answer

In equilibrium, there is no government intervention, while in disequilibrium, there is.

Answer

In equilibrium, consumers dominate the market, while in disequilibrium, producers dominate.

Question 40

Describe the role of elasticity in market equilibrium.

Accepted Answer

Elasticity measures the responsiveness of quantity supplied or demanded to price changes, influencing the slope of supply and demand curves.

Answer

Elasticity has no significant role in market equilibrium.

Answer

Elasticity only determines the equilibrium price, not the equilibrium quantity.

Answer

Elasticity is only applicable in perfectly competitive markets.

Question 41

Identify the statement that is NOT an implication of market equilibrium.

Accepted Answer

Necessity of government intervention

Answer

Efficient allocation of resources

Answer

Maximization of consumer and producer surplus

Answer

Price stability

Question 42

Define Pareto efficiency and explain its significance in relation to market equilibrium.

Accepted Answer

Pareto efficiency exists when it is impossible to improve the situation of one consumer without worsening the situation of another.

Answer

Pareto efficiency can only be achieved with government intervention in the market.

Answer

Pareto efficiency has no relevance to market equilibrium.

Answer

Pareto efficiency requires a perfectly competitive market structure.