Market equilibrium (Homework)

1. A free market is in disequilibrium with a shortage of a product.

As the market moves towards equilibrium, what will happen to the price, the quantity
demanded and the quantity supplied?
Price Quantity demanded Quantity supplied
A Decrease Decrease Increase
B Decrease Increase Decrease
C Increase Decrease Increase
D Increase Increase Decrease

2. In 2008, Ansell, makers of surgical products and rubber gloves, increased profits by 2.6 %,
partly because of increased safety and health concerns in Brazil, Mexico, China and Russia.
What would happen to the demand and supply curves on a diagram for Ansell’s products?
Demand curve Supply curve
A A shift to the left A shift to the left
B A shift to the left A shift to the right
C A shift to the right No change
D No change A shift to the left

3. In the diagram below, D1 and S1 represent the demand and supply curves of a Malaysian
industry in its home market. Equilibrium is at X.
The industry has to pay a large wage increase and at the same time faces increased
competition from imported substitutes.
Which point on the diagram could represent the new equilibrium?

Economics Chapter 2
4. In a market for a good both demand and supply change at the same time.
Which combination of changes would enable an economist to predict with confidence that
more resources will be needed in its production but not the direction of the associated price
change?
Demand Supply
A Decrease Decrease
B Decrease Increase
C Increase Decrease
D Increase Increase

5. In a market there is a surplus of a good.

Which change would cause the market to come to an equilibrium?
A. a decrease in demand
B. a fall in price
C. a government minimum price
D. an increase in supply

6. A US study, published in July 2014, warned teenagers to reduce the amount of fizzy drink
they consume. One can of fizzy drink contains an adult’s entire daily sugar allowance.
If the advice were accepted, how might the effect be illustrated on demand and supply
diagrams for fizzy drinks and for sugar?
Diagram for fizzy drinks Diagram for sugar
A demand curve moves to the left movement up the supply curve
B demand curve moves to the left movement down the supply curve
C movement up the demand curve supply curve moves to the right
D movement up the demand curve supply curve moves to the left

Economics Chapter 2