MRU: 4.1: The Equilibrium Price

Q1: At the equilibrium price for oil, only the _______ buyers buy oil and only the _______ sellers sell oil. - low-value; high cost - high-value; low-cost - low-value; low cost - high-value; high-cost

Q2: If in a market there are no unexploited gains from trade and no wasteful trades, it must be that: - consumer surplus and producer surplus are equal. - the equilibrium quantity is being produced. - the difference between consumer surplus and producer surplus is maximized. - the lowest-value buyers and the highest-cost sellers are trading.

Q3: Gains from trade are maximized at market equilibrium because: - only the lowest-value buyers buy and only the lowest-cost sellers sell. - only the highest-value buyers buy and only the lowest-cost sellers sell. - only the highest-value buyers buy and only the highest-cost sellers sell. - only the lowest-value buyers buy and only the highest-cost sellers sell.

Q4: At the market equilibrium: - all units that sellers could possibly produce are sold. - all trades that can generate gains from trade take place, and no trades take place that would not generate gains from trade. - all trades that generate gains from trade greater than the price take place, and no trades that generate gains from trade less than the price are produced. - all units that buyers could possibly buy are purchased.

Q5: At a price lower than the equilibrium price, there is a _______, and buyers _______. - shortage; demand less than sellers are willing to sell - shortage; demand more than sellers are willing to sell - surplus; demand more than sellers are willing to sell - surplus; demand less than sellers are willing to sell

Q6: The "gains from trade" can be defined as: - the difference between a good's value and its price. - the difference between a good's price and its cost. - the difference between a good's value and its cost. - the difference between a good's quantity and its price.

Q7: When there is a surplus in a market: - sellers have an incentive to reduce their prices so they can outcompete other sellers and sell more. - sellers have an incentive to raise their prices so they can outcompete other sellers and sell more. - sellers have an incentive to reduce their prices so they can outcompete other sellers and sell less. - sellers have an incentive to raise their prices so they can outcompete other sellers and sell less.

Q8: The equilibrium price is the only ________ price. - fair - profitable - stable - true

Q9: The equilibrium quantity is equal to: - the higher of quantity demanded and quantity supplied, which are different, at the equilibrium price. - the equilibrium price. - both quantity demanded and quantity supplied at the equilibrium price. - the lower of quantity demanded and quantity supplied, which are different, at the equilibrium price.

Q10: Graphically speaking, the equilibrium price and quantity can be found by locating: - the bottom of the supply and demand curves. - the quantity where price demanded and price supplied are equal. - the intersection of the supply and demand curves. - the top of the supply and demand curves.

Q11: A surplus will occur in the market for oil if: - the quantity of oil is below the equilibrium quantity. - the price of oil is below the equilibrium price. - the price of oil is above the equilibrium price. - the quantity of oil is above the equilibrium quantity.

Q12: The equilibrium price is the price where: - there is the greatest pressure on the price to change. - the quantity demanded is the opposite of the quantity supplied. - the quantity demanded is equal to the quantity supplied. - the quantity demanded and the quantity supplied are both zero.

Q13: Markets find equilibrium, and maximize gains from trade, when: - buyers and sellers act in the best interest of society. - buyers and sellers compete with each other. - buyers and sellers act in their own self interest. - government closely regulates prices.

Q14: The demand and supply curves show how buyers and sellers ________; the interaction of buyers and sellers ________. - compete against each other; shows that there is no winner - respond to prices; determines the price - determine the price; shows how they respond to prices - compete against each other; determines the winner

Q15: In a market, buyers compete with ________, and sellers compete with ________ . - sellers; buyers - sellers; sellers as well - other buyers; other sellers - buyers; buyers as well