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ECO 365T Wk 2 – Practice: Market Dynamics and Efficiency Quiz
Complete the Week 2 Market Dynamics and Efficiency Quiz in McGraw-Hill Connect®. These are randomized questions.
Note: You have unlimited attempts available to complete practice assignments. The highest scored attempt will be recorded. These assignments have earlier due dates, so plan accordingly. Grades must be transferred manually to eCampus by your instructor. Don’t worry, this might happen after the due date.
The monthly demand and supply schedules for new cars at a large California dealership are shown in the table below.
Market for New Cars
| Price (dollars) | Quantity of Cars Demanded | Quantity of Cars Supplied |
| $30,000 | 0 | 250 |
| 25,000 | 100 | 225 |
| 20,000 | 200 | 200 |
| 15,000 | 300 | 175 |
| 10,000 | 400 | 150 |
If the dealership is currently charging $25,000 for a new car, at the end of the month there will be:
a shortage of 125 cars.
a surplus of 5,000 cars.
a surplus of 125 cars.
a shortage of 5,000 cars.
neither a surplus nor a shortage; the market will be in equilibrium.
The demand and supply schedules for sunscreen at a small beach are shown below.
Market for Sunscreen
| Price (dollars per bottle) | Quantity of Sunscreen Demanded (bottles) | Quantity of Sunscreen Supplied (bottles) |
| $35 | 1,000 | 8,500 |
| 30 | 2,000 | 7,000 |
| 25 | 3,000 | 5,500 |
| 20 | 4,000 | 4,000 |
| 15 | 5,000 | 2,500 |
| 10 | 6,000 | 1,000 |
Instructions: Enter your answers as a whole number.
- If the price is $15 per bottle, how many bottles of sunscreen are demanded and supplied?
Qd =
Qs =
In this case, there would be upward pressure on the price.
- What is the equilibrium price and quantity in the market for sunscreen?
P =
Q =
Use the following graph for the milk market to answer the question below.
There would be excess production of milk whenever the price is
Multiple Choice
greater than $1.50 per gallon.
greater but not less than $2.00 per gallon.
less than $1.50 per gallon.
less but not greater than $2.00 per gallon.
There is a surplus in a market for a product when
Multiple Choice
quantity demanded is less than quantity supplied.
demand is less than supply.
the current price is lower than the equilibrium price.
quantity demanded is greater than quantity supplied.
Use the following table to answer the question below.
| Price per Unit | Quantity Demanded per Year | Quantity Supplied per Year |
| $5 | 2,000 | 0 |
| 10 | 1,800 | 300 |
| 15 | 1,600 | 600 |
| 20 | 1,400 | 900 |
| 25 | 1,200 | 1,200 |
| 30 | 1,000 | 1,500 |
There will be a shortage whenever the price is
Multiple Choice
equals $25.
higher than $25.
higher than $30.
lower than $25.
A decrease in demand and an increase in supply will
Multiple Choice
decrease price and affect the equilibrium quantity in an indeterminate way.
decrease price and increase the equilibrium quantity.
increase price and affect the equilibrium quantity in an indeterminate way.
affect price in an indeterminate way and decrease the equilibrium quantity.
There is an excess demand in a market for a product when
Multiple Choice
quantity demanded is greater than quantity supplied.
supply is less than demand.
the current price is higher than the equilibrium price.
quantity demanded is less than quantity supplied.
In competitive markets, surpluses or shortages will
Multiple Choice
cause shifts in the demand and supply curves that tend to eliminate the excess production or excess demand.
cause changes in the quantities demanded and supplied that tend to intensify the excess production or excess demand.
never exist because the markets are always at equilibrium.
cause changes in the quantities demanded and supplied that tend to eliminate the excess production or excess demand.
There is a shortage in a market for a product when
Multiple Choice
quantity demanded is lower than quantity supplied.
supply is less than demand.
demand is less than supply.
the current price is lower than the equilibrium price.
Which of the following is an example of a price ceiling?
Multiple Choice
Price supports for agricultural products.
Subsidies for apartment rent in major cities.
Limits on interest rates charged by credit card companies.
Minimum-wage laws for unskilled workers.
Assume that the graphs show a competitive market for the product stated in the question.
Select the graph above that best shows the change in the market for leather coats when leather coats become more fashionable among young consumers.
Multiple Choice
graph (1)
graph (4)
graph (3)
graph (2)
In competitive markets, a surplus or shortage will
Multiple Choice
never exist because the markets are always at equilibrium.
cause changes in the quantities demanded and supplied that tend to eliminate the surplus or shortage.
cause changes in the quantities demanded and supplied that tend to intensify the surplus or shortage.
cause shifts in the demand and supply curves that tend to eliminate the surplus or shortage.
Use the following graph for the milk market to answer the question below.
In this market, the equilibrium price is ____ and equilibrium quantity is ___
Multiple Choice
$1.50 per gallon; 28 million gallons.
$1.50 per gallon; 30 million gallons.
$1.00 per gallon; 35 million gallons.
$28 per gallon; 150 million gallons.
Use the following table to answer the question below.
| Price per Unit | Quantity Demanded per Year | Quantity Supplied per Year |
| $5 | 2,000 | 0 |
| 10 | 1,800 | 300 |
| 15 | 1,600 | 600 |
| 20 | 1,400 | 900 |
| 25 | 1,200 | 1,200 |
| 30 | 1,000 | 1,500 |
In this competitive market, the price and quantity will settle at
Multiple Choice
$20 and 900 units.
$25 and 1,200 units.
$15 and 1,600 units.
$10 and 1,800 units.
The additional benefit of producing one more roast beef sandwich at a local deli is $2. The additional cost of producing one more roast beef sandwich is $3. To improve allocative efficiency:
producers should produce at least one more roast beef sandwich because MB > MC.
producers should produce at least one more roast beef sandwich because MC > MB.
producers should not produce one more roast beef sandwich because MB > MC.
producers should not produce one more roast beef sandwich because MC > MB.
The value that consumers get (from consuming a product) over and above what they actually paid for the product is called
Multiple Choice
consumer surplus.
consumer utility.
consumption expenditures.
consumer demand.
Consumer surplus
Multiple Choice
is the difference between the maximum price consumers are willing to pay for a product and the lower equilibrium price.
is the difference between the minimum price producers are willing to accept for a product and the higher equilibrium price.
is the difference between the maximum price consumers are willing to pay for a product and the minimum price producers are willing to accept.
rises as equilibrium price rises.
Charlie is willing to pay $10 for a T-shirt that is priced at $9. If Charlie buys the T-shirt, then his consumer surplus is
Multiple Choice
$19.
$1.
$90.
$0.90.
If the equilibrium wage for fast-food restaurants is $8 and the government enforces a minimum wage of $15
Multiple Choice
workers will be able to find more jobs.
overall, society will be better off.
workers will get paid less.
fast-food restaurants will hire fewer workers.
The market supply curve indicates the
Multiple Choice
total revenues that sellers would receive from selling various quantities of the product.
minimum acceptable prices that sellers are willing to accept for the product.
maximum prices that buyers are willing and able to pay for the product.
total amount that buyers will pay in buying a given quantity of the product.
Charlie is willing to pay $10 for a T-shirt that is priced at $9. If Charlie buys the T-shirt, then his consumer surplus is
Multiple Choice
$90.
$1.
$19.
$0.90.
Graphically, producer surplus is measured as the area
Multiple Choice
under the demand curve and below the actual price.
above the supply curve and below the actual price.
under the demand curve and above the actual price.
above the supply curve and above the actual price.
Allocative efficiency occurs only at that output where
Multiple Choice
the combined amounts of consumer surplus and producer surplus are maximized.
consumer surplus exceeds producer surplus by the greatest amount.
marginal benefit exceeds marginal cost by the greatest amount.
the areas of consumer and producer surplus are equal.
A producer’s minimum acceptable price for a particular unit of a good
Multiple Choice
must cover the wages, rent, and interest payments necessary to produce the good but need not include profit.
equals the marginal cost of producing that particular unit.
is the same for all units of the good.
will, for most units produced, equal the maximum that consumers are willing to pay for the good.
Productive efficiency occurs at the point where
Multiple Choice
the production technique minimizes economic surplus.
the production technique minimizes cost.
marginal benefit exceeds marginal cost by the greatest amount.
consumer surplus exceeds producer surplus by the greatest amount.
The minimum acceptable price for a product that producer Sam is willing to receive is $15. The price he could get for the product in the market is $18. How much is Sam’s producer surplus?
Multiple Choice
$45
$3
$270
$33
The difference between the maximum price a consumer is willing to pay for a product and the actual price the consumer pays is called
Multiple Choice
market failure.
consumer surplus.
consumer demand.
utility.
Consumer surplus arises in a market because
Multiple Choice
the market price is higher than what some consumers are willing to pay for the product.
at the current market price, quantity supplied is greater than quantity demanded.
at the current market price, quantity demanded is greater than quantity supplied.
the market price is below what some consumers are willing to pay for the product.
The difference between the actual price that a producer receives and the minimum acceptable price the producer is willing to accept is called the producer
Multiple Choice
revenues.
surplus.
costs.
utility.
In the market for a particular pair of shoes, Jena is willing to pay $75 for a pair while Jane is willing to pay $85 for a pair. The actual price that each has to pay for a pair of shoes is $65. What is the combined amount of consumer surplus for Jena and Jane?
Multiple Choice
$130.
$215.
$30.
$10.
Producer surplus
Multiple Choice
is the difference between the maximum price consumers are willing to pay for a product and the lower equilibrium price.
rises as equilibrium price falls.
is the difference between the maximum price consumers are willing to pay for a product and the minimum price producers are willing to accept.
is the difference between the minimum price producers are willing to accept for a product and the higher equilibrium price.
The production of paper often creates a waste product that pollutes waterways. Assume the producer of paper does not directly pay to dispose of the waste in the water.
In this case, the price of paper will be below the socially efficient price and the amount of paper produced will be above the socially efficient amount.
Which of the following goods is nonrival?
A visit to the doctor at her office
A soccer match in a stadium
A pizza at a pizza parlor
A tuna in the ocean
Which of the following goods is both nonrival and nonexcludable?
A hot dog at a hot dog stand
A soccer match in a stadium
The light from a lighthouse at a harbor entrance
A tuna in the ocean