Question : 11) Assume there a shortage in the market for digital : 1267040

11) Assume there is a shortage in the market for digital music players.  Which of the following statements correctly describes this situation?

A) The demand for digital music players is greater than the supply of digital music players.

B) Some consumers will be unable to obtain digital music players at the market price and will have an incentive to offer to buy the product at a higher price.

C) The price of digital music players will rise in response to the shortage; as the price rises the quantity demanded will increase and the quantity supplied will decrease.

D) the shortage will cause an increase in the equilibrium price of digital music players.

12) In a perfectly competitive market, there are ________ buyers and ________ sellers.

A) many; few

B) few; many

C) many; many

D) few; few

Figure 3-6

13) Refer to Figure 3-6.  The figure above represents the market for canvas tote bags. Assume that the market price is $35.  Which of the following statement is true?

A) There is a surplus that will cause the price to decrease; quantity demanded will then increase and quantity supplied will decrease until the price equals $25.

B) There is a surplus that will cause the price to decrease; quantity supplied will then increase and quantity demanded will decrease until the price equals $25.

C) There will be a surplus that will cause the price to decrease; demand will then increase and supply will decrease until the price equals $25.

D) There is a surplus that will cause the price to increase; quantity demanded will then decrease and quantity supplied will increase until the price equals $25.

14) Refer to Figure 3-6.  The figure above represents the market for canvas tote bags.  Assume that the price of tote bags is $15.  At this price:

A) the quantity demanded exceeds the quantity supplied of tote bags by 75.  The price will eventually rise to $25 where quantity demanded will equal quantity supplied.

B) the demand exceeds the supply of tote bags by 55. Some consumers will have an incentive to offer to buy tote bags at a higher price. 

C) there is a shortage, equal to 55 tote bags, that will be eliminated when the price rises to $25.

D) there is a shortage equal to 55 tote bags; the price of tote bags will rise until demand is equal to supply.

15) Refer to Figure 3-6.  The figure above represents the market for canvas tote bags.  Compare the conditions in the market when the price is $50 and when the price is $35.  Which of the following describes how the market differs at these prices?

A) At each price there is a surplus; the surplus is greater at $35 than at $50.

B) The difference between quantity supplied and quantity demanded is greater at $50 than at $35.

C) At each price there is a surplus; firms will lower the equilibrium price in order to eliminate the surplus.

D) At each price the supply of tote bags exceeds that demand for tote bags.

16) If, for a product, the quantity supplied exceeds the quantity demanded, the market price will fall until

A) the quantity demanded exceeds the quantity supplied.  The market will then be in equilibrium.

B) quantity demanded equals quantity supplied.  The equilibrium price will then be lower than the market price. 

C) all consumers will be able to afford the product.

D) quantity demanded equals quantity supplied.  The market price will then equal the equilibrium price.

17) Which of the following is evidence of a surplus of bananas?

A) Firms raise the price of bananas.

B) The price of bananas is lowered in order to increase sales.

C) The equilibrium price of bananas rises due to an increase in demand.

D) The quantity demanded of bananas is greater than the quantity supplied.

18) Auctions in recent years have resulted in higher prices paid for letters written by John Wilkes Booth than those written by Abraham Lincoln. Which of the following events would cause the price differences in these letters to get smaller? 

A) The demand for Booth letters decreases.

B) The supply of Lincoln letters increases.

C) The demand for Lincoln letters increases and the supply of Booth letters increases.

D) The demand for Lincoln letters decreases and the demand for Booth letters increases..

19) Auctions in recent years have resulted in higher prices paid for letters written by John Wilkes Booth than those written by Abraham Lincoln.  What is a reason for this difference in price?

A) There is a surplus of letters written by Booth and a shortage of letters written by Lincoln.

B) Many people are more fascinated by villains and anti-heroes than by heroic figures.

C) There are more letters available for collectors to buy that were written by Lincoln than there are letters that were written by Booth.

D) Booth was a well-known actor; the demand for his letters rose as wealthy actors attempted to buy them.

20) In response to a surplus the market price of a good will fall; as the price falls, the quantity demanded will increase and quantity supplies will decrease until equilibrium is reached.