CLEP Microeconomics chapter practice4 questions

08 Market Equilibrium and Market Changes

These questions come directly from the chapter practice in the book. Choose the best answer, check your reasoning, and use the explanation to correct any gap.

Question 1

Question 1 of 4

At a price of $18, quantity demanded is 90 and quantity supplied is 65. Which market pressure should occur?

Planned purchases exceed planned sales by 25 units, creating a shortage and pressure for price to rise.
Show answer and explanation

C. A shortage puts upward pressure on price.

Planned purchases exceed planned sales by 25 units, creating a shortage and pressure for price to rise.

Question 2

Question 2 of 4

The diagram shows demand increasing from D_1 to D_2 while supply remains unchanged. What happens to equilibrium price and quantity?

A rightward demand shift raises both the market-clearing price and quantity when supply is unchanged.
Show answer and explanation

D. Both rise.

A rightward demand shift raises both the market-clearing price and quantity when supply is unchanged.

Question 3

Question 3 of 4

Demand decreases at the same time that supply increases. Which equilibrium result is certain?

Both shifts reduce equilibrium price. Their effects on equilibrium quantity oppose one another, so quantity is indeterminate.
Show answer and explanation

E. Price falls.

Both shifts reduce equilibrium price. Their effects on equilibrium quantity oppose one another, so quantity is indeterminate.

Question 4

Question 4 of 4

A market has Q_D=100-2P and Q_S=20+2P. What is equilibrium price?

Set planned quantities equal: 100-2P=20+2P, so 80=4P and P=20.
Show answer and explanation

D. $20

Set planned quantities equal: 100-2P=20+2P, so 80=4P and P=20.

Quiz complete