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4 Applications of Equilibrium and Elasticity Online Quiz Questions

Use this free practice quiz with 20 questions to review 4 Applications of Equilibrium and Elasticity, test your knowledge, and prepare for your next test or exam.

20 questions
01
True or false
1 point

At a price above equilibrium, quantity supplied exceeds quantity demanded, creating a surplus.

  1. A

    True

  2. B

    False

02
Fill in the blank
1 point

At a price below equilibrium, quantity demanded exceeds quantity supplied, creating a .

03
Choose one
1 point

A frost damages the coffee crop, reducing supply while demand remains unchanged. What happens to the market's equilibrium price and quantity?

  1. A

    Equilibrium price falls and quantity rises.

  2. B

    Equilibrium price rises and quantity falls.

  3. C

    Both equilibrium price and quantity rise.

  4. D

    Both equilibrium price and quantity fall.

04
Written response
1 point

A $2 tax per unit leaves 700 units sold after the tax. What is the tax revenue, in dollars?

05
True or false
1 point

A price floor set below the equilibrium price is nonbinding and does not change the market outcome.

  1. A

    True

  2. B

    False

06
Choose one
1 point

A legal maximum price is set below the market equilibrium price. What market imbalance does this binding price ceiling create?

  1. A

    A shortage, because buyers want more than sellers offer.

  2. B

    A surplus, because sellers offer more than buyers want.

  3. C

    No imbalance, because the price is above equilibrium.

  4. D

    No change in the market, because a ceiling always is nonbinding.

07
Choose all
1 point

Select all statements that correctly describe how demand elasticity relates to the effect of a price change on total revenue.

  1. A

    With elastic demand, a price increase tends to reduce total revenue.

  2. B

    With inelastic demand, a price cut tends to reduce total revenue.

  3. C

    With unit-elastic demand, a modest price change leaves total revenue roughly unchanged.

  4. D

    With inelastic demand, a price increase tends to reduce total revenue.

08
Written response
1 point

When demand is relatively inelastic compared with supply, which market side tends to bear more of the tax burden?

09
Fill in the blank
1 point

The way the economic burden of a tax is divided between buyers and sellers is called .

10
Choose all
1 point

Compared with the no-tax equilibrium, select all usual outcomes of a per-unit tax.

  1. A

    The price buyers pay is higher.

  2. B

    The price sellers keep is lower.

  3. C

    The quantity traded is lower.

  4. D

    The price buyers pay and the price sellers keep both rise.

11
Choose one
1 point

A more efficient production method increases supply, lowering equilibrium price and raising quantity. If demand is inelastic, which conclusion about sellers' total revenue is supported?

  1. A

    Total revenue must rise because more units are sold.

  2. B

    Total revenue stays roughly unchanged because supply increased.

  3. C

    Total revenue may fall because the proportional price decline can exceed the proportional quantity increase.

  4. D

    Total revenue must fall whenever supply increases, regardless of demand elasticity.

12
Open ended
1 point

Explain how the short side of the market limits the number of trades under a binding price ceiling and under a binding price floor.

13
Choose one
1 point

A change in a good's own price shifts its demand curve. Which response correctly evaluates this statement?

  1. A

    True; any price change shifts the demand curve.

  2. B

    False; a change in the good's own price causes movement along its demand curve.

  3. C

    True; a price change shifts both demand and supply.

  4. D

    False; a change in the good's own price shifts the supply curve only.

14
True or false
1 point

True or false: If demand for housing rises while an already binding rent ceiling and supply remain unchanged, the shortage decreases.

  1. A

    True

  2. B

    False

15
Choose one
1 point

Which event causes a movement along a demand curve rather than a shift of the curve?

  1. A

    A change in buyers’ income shifts the demand curve.

  2. B

    A change in the good’s own price causes movement along its demand curve.

  3. C

    A change in input costs causes movement along the supply curve.

  4. D

    A change in the number of buyers causes movement along the demand curve.

16
Choose one
1 point

A more efficient production method increases supply in a market, while demand remains unchanged. What happens to the market’s equilibrium price and quantity?

  1. A

    Equilibrium price rises and quantity falls.

  2. B

    Equilibrium price falls and quantity rises.

  3. C

    Both equilibrium price and quantity rise.

  4. D

    Both equilibrium price and quantity fall.

17
Choose one
1 point

A legal minimum price is set above a market’s equilibrium price. What market condition does this binding price floor create?

  1. A

    A shortage, because quantity demanded exceeds quantity supplied.

  2. B

    A surplus, because quantity supplied exceeds quantity demanded.

  3. C

    No change in the market outcome.

  4. D

    A lower equilibrium price and a higher equilibrium quantity.

18
Written response
1 point

What term describes the gap a per-unit tax creates between the price buyers pay and the amount sellers keep?

19
Choose one
1 point

A seller cuts a product’s price, and demand is elastic over the relevant range. What tends to happen to the seller’s total revenue?

  1. A

    Total revenue tends to rise.

  2. B

    Total revenue tends to fall.

  3. C

    Total revenue stays roughly unchanged.

  4. D

    Total revenue must become zero.

20
Written response
1 point

A per-unit tax is $2, and 1,000 units are sold after the tax. What is the tax revenue in dollars?