ECO 2301
Sec 002
Spring 2014
K. Becker
QUIZ #8
Friday, March 7th
Solutions
1. An outcome is socially optimal if it:
A. follows from a market equilibrium.
B. follows from collective action.
C. leaves no money on the table.
D. maximizes total economic surplus.
A socially optimal outcome is one that maximizes total surplus.
2. A market comprised of a downward-sloping demand curve that intersects an upward-sloping
supply curve is said to be stable because:
A. price will never change.
B. quantity will never change.
C. demand will never change.
D. at any price other than equilibrium, forces in the market move price towards the equilibrium.
Equilibrium implies that opposing forces balance each other.
3.
Refer to the figure above. The equilibrium price and quantity for this market are:
A. $8; 6.
B. $6; 4.
C. $4; 6.
D. $2; 8.
The equilibrium quantity and price of a product are the values that correspond to the intersection
of the supply and demand curves.
4.
Refer to the figure above. At a price of $9, the market will experience ______________ in the
amount of __________ units.
A. excess demand; 5 units
B. excess supply; 6 units
C. equilibrium; 4 units
D. excess supply; 5 units
At a price of $9 demanders will want to purchase 1 unit and suppliers will want to supply 6 units,
a difference of 5 units.
5.
Refer to the figure above. At a price of $3, the market will experience ______________ in the
amount of _________ units.
A. excess demand; 5 units
B. excess supply; 7 units
C. equilibrium; 4 units
D. excess supply; 3 units
At a price of $3 demanders will want to purchase 7 units and suppliers will want to supply 2
units, a difference of 5 units.