What is market equilibrium?

• Quantity demanded equals quantity supplied

At what price would a shortage occur if the equilibrium price of a good is $3?

• $2
• $3
• $4
• $5

A price ceiling is always set above the equilibrium price.

What happens to equilibrium price and quantity if demand increases while supply remains unchanged?

• Price rises and quantity falls
• Price and quantity both rise
• Price falls and quantity rises
• Price and quantity both fall

If the government sets a price floor above the equilibrium price, what is the likely immediate result in the market?

• Shortage
• Surplus
• Equilibrium
• Decrease in demand

Surplus occurs when quantity demanded exceeds quantity supplied.

Name one result of a government subsidy given to sellers in a market.

• Increase in supply

What happens to the demand for chicken if the number of buyers decreases, assuming all other factors stay the same?

• Demand increases
• Demand decreases
• Supply increases
• No change in demand

If the cost of production for a good decreases, the supply curve shifts to the left.

When the government imposes a higher tax on sellers, what typically happens to the equilibrium price and quantity?

• Both price and quantity rise
• Both price and quantity fall
• Price rises, quantity falls
• Price falls, quantity rises