Module 7

Check Your Understanding

1. After each event describe below, does a surplus or shortage exist at the original
equilibrium price? What will happen to the equilibrium price as a result?

a. Surplus, because the quantity of the grapes supplied would call for more demand
b. Surplus, because the quantity of rooms exceeds what is demanded meaning prices
will fall
c. Shortage, because the quantity demanded exceeds what is available

2. Explain how the indicated change affects supply or demand for the good in question and
how the shift you described affects the equilibrium price and quantity.

a. The gasoline price decrease will result in a shift to the right because of the demand for
it, affecting the equilibrium price for large cars to rise as well as the equilibrium quantity
b. Recycled paper will shift to the left, causing equilibrium price to drop and the
equilibrium quantity to rise
c. Movies will shift to the left, equilibrium price and quantity will drop

Multiple Choice

1. Which of the following describes what will happen in the market tomatoes if a
salmonella outbreak is attributed to tainted tomatoes?
- D

2. Which of the following will lead to an increase in the equilibrium price of product “X”?
- B

3. The equilibrium price will rise, but the equilibrium quantity may increase, decrease, or
stay the same if
- A

4. An increase in the number of buyers and a technological advance will cause

- A

5. Which of the following is certainly true if demand and supply increase at the same time
- C

Free Response

1. The graph demonstrates a shortage in the quantity of tomatoes

 2. Equilibrium Price will fall as the equilibrium quantity rises
Module 8
Check Your Understanding

1. Use the accompanying supply and demand diagram to show how each of the following
can result from the price ceiling.

a. The demand for parking spaces is higher, making it difficult to grab ahold of one
b. Renting parking spaces is cheaper, so they rather driver alone than carpool
c. People leave the game because it is difficult to find parking
d. People get there earlier to find parking spaces because the demand is high
e. Friends will allow other friends to park in their driveways
f. People will rent out spaces to make money because it is difficult to find parking

2. True or False?

a. False, because this would mean the quantity supplied would fall
b. True, fall in quantity supplied
c. True, those who sell the product are not getting money for it

3. Asses the following statements and illustrate your answer using the figure provided

a. Increase, because gas is a necessity as we use automobiles everyday

b. Consumers will not be happy with the increase of price, better service is better
c. Consumers will be hurt, but will have to move on

Multiple Choice

1. To be effective, a price ceiling must be set

- E

2. Refer to the graph provided.

- B

3. Effective price ceilings are inefficient because they

- E

4. How many workers will benefit from the higher wage?

- B

5. How many workers are unemployed?

- C
Free Response

1. Refer to the graph

a. $6/h for every 1,800 workers

b. $8
c.
i. 2,600
ii. 1,000
iii. 600
iv. 800
 Module 9
Check Your Understanding

1. Handed In
2. Handed In

Multiple Choice

1. If the gov. established a quota of 1,000 in this market, the demand price would be?
- D

2. If the gov. established a quota of 1,000 in this market, the supply price would be?
- B

3. The quota rent would be?

- B

4. Quotas lead to which of the following?

- D

5. Which of the following would decrease the effect a quota on the quantity sold in a
market?
- A

Free Response

1. Handed In
2. Handed In