Question Bank: Market Equilibrium

What is market equilibrium?

When does excess demand occur in a market?

What occurs at a price above the equilibrium price?

What is the equilibrium price in a perfectly competitive market?

In a market with fixed number of firms, what happens to equilibrium supply when demand increases?

How do government-imposed price ceilings affect market equilibrium?

If a firm in a perfectly competitive market is earning economic profits, what will happen in the long run?

What is the effect of a rightward shift in the supply curve?

How does an increase in consumer income generally affect the market for a normal good?

What is a likely consequence of imposing a price floor above the equilibrium price?

If both demand and supply increase simultaneously, what can be unambiguously determined?

What happens in the market when there is excess supply?

What determines the equilibrium number of firms in a market with free entry and exit?

What occurs at the equilibrium price in a perfectly competitive market?

What happens when a price ceiling is set below the equilibrium price?

How does an increase in demand affect equilibrium price and quantity?

What is the impact of a price floor set above the equilibrium price?

If the government imposes a price ceiling, what is one possible consequence?

In what situation would a market not reach equilibrium?

What role does the 'invisible hand' play in achieving market equilibrium?

What is the equilibrium price?

When a price floor leads to surplus, what typically happens?

What occurs if the demand curve shifts to the right while the supply curve remains unchanged?

Why might a price ceiling lead to a black market?

What might a decrease in availability of inputs do to the market supply curve?

In the context of market equilibrium, what does 'excess demand' mean?

When might government intervention in price via a price ceiling be justified?

What is most likely to happen in a market characterized by excess supply?

How can a minimum wage cause a surplus in the labor market?

What happens to market prices when firms begin to earn supernormal profits in a perfectly competitive market?

In an equilibrium state with free entry and exit, firms earn what type of profit?

If the market price is greater than the minimum average cost, what is likely to occur?

What happens to the equilibrium quantity when both demand and supply curves shift rightward?

In a perfectly competitive market, if firms are incurring losses, what action will they likely take?

What is the implication of the condition p = min AC in the market?

How does a leftward shift in the demand curve affect equilibrium price and quantity when supply is constant?

Which of the following statements correctly describes free entry and exit in a market?

In a market with free entry and exit, if existing firms begin to earn normal profits, what will likely happen next?

What is the role of the supply curve in determining market equilibrium under free entry and exit?

If a market is in long-term equilibrium, which of the following statement is true?

Which of the following best explains the relationship between market price and average cost in a perfectly competitive market?

What occurs when a firm is producing at a price below its minimum average cost?

The condition for market equilibrium in the long-run is represented by which equation?

In a scenario of free entry and exit, which factor does NOT change the equilibrium price?

What happens to the equilibrium price when demand increases and supply remains constant?

If the supply curve shifts leftward, how does it affect equilibrium quantity?

What effect does an increase in the price of a substitute good have on the demand curve of a product?

If both demand and supply decrease, what is the likely effect on equilibrium quantity?

In a scenario where demand increases while supply decreases, what happens to the equilibrium price?

Which of the following factors would cause the supply curve to shift rightward?

What is likely to occur if both supply and demand curves shift leftward?

If there is an increase in consumer income affecting normal goods, what happens to the demand curve?

An increase in input prices will affect the supply curve how?

What occurs when there is excess supply in a market?

When the demand for a good is elastic, how do buyers generally respond to a price increase?

If a new consumer trend causes a significant increase in the demand for electric cars, what will happen to their equilibrium price?

What is the primary effect of a sudden decrease in the population on the market for housing?

When supply increases and demand decreases simultaneously, what happens to the equilibrium quantity?