Question : Figure 3-6 21) Refer to Figure 3-6.  The figure above represents : 1388152

Figure 3-6

21) Refer to Figure 3-6.  The figure above represents the market for coffee grinders.  Compare the conditions in the market when the price is $15 and when the price is $21.  Which of the following describes how the market differs at these prices?

A) At each price there is a shortage; the shortage is greater at $15 than at $21.

B) The difference between quantity supplied and quantity demanded is greater at $21 than at $15.

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

D) At each price the demand for coffee grinders exceeds the supply of coffee grinders.

22) If the quantity demanded for a product exceeds the quantity supplied, the market price will rise until

A) the quantity demanded equals the quantity supplied.  The product will then no longer be scarce.

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

C) only wealthy consumers will be able to afford the product.

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

23) Which of the following is evidence of a shortage of chocolate?

A) Firms lower the price of chocolate.

B) The price of chocolate is raised in order to increase sales.

C) The equilibrium price of chocolate falls due to a decrease in demand.

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

24) Even when the demand for one good is high, the price of the good is also affected by supply.  The textbook illustrates this by comparing the price of two items that were auctioned on the same day.  Which of the following describes the results of the auction?  

A) A letter written by Abraham Lincoln sold for a higher price than a letter written by John Wilkes Booth.

B) A letter written by Abraham Lincoln was sold for a higher price than a letter written by Adam Smith.

C) A letter written by John Wilkes Booth sold for a higher price than a letter written by Lee Harvey Oswald. 

D) A letter written by John Wilkes Booth sold for a higher price than a letter written by Abraham Lincoln.

25) If the demand for letters written by Abraham Lincoln is higher than the demand for letters written by John Wilkes Booth, what would have to be true for the market equilibrium prices for these letters to be equal?

A) The supply of Lincoln letters would have to be less than the supply of Booth letters.

B) The supply of Booth letters would have to be less than the supply of Lincoln letters.

C) The supply of Lincoln letters and the supply of Booth letters would have to be equal.

D) If the demand for Lincoln letters is greater than the demand for Booth letters, the market equilibrium price for Lincoln letters will always be greater than the market equilibrium price for Booth letters.

26) Competitive market equilibrium is a market equilibrium with many buyers and sellers.

27) In response to a shortage the market price of a good will rise; as the price rises, the demand will decrease and supply will increase until equilibrium is reached.

28) A surplus is defined as the situation that exists when the quantity of a good supplied is greater than the quantity demanded.

29) A surplus occurs when the market price is lower than the equilibrium price.

30) It is possible for a market for a good to experience a surplus and a shortage at the same time.