Equilibrium Practice Questions

Principles of Microeconomics
Instructor: Sandhya Patlolla

1. The below table gives the demand and supply schedules for cat food.

a) The equilibrium price will be _______________

b) The equilibrium quantity will be___________________

c) If the price is $3.00 per pound of cat food, will there be a shortage, a surplus? _________________

d) How much is the shortage or surplus equal to _____________________

e) Will the price stay at $3.00 for the long time? Why?

f) If the price is $1.00 per pound of cat food, will there be a shortage, a surplus? _________________

g) How much is the shortage or surplus equal to _____________________

h) Will the price stay at $1.00 for the long time? Why?

1) New automobiles and used automobiles are substitutes. Suppose the prices of new automobile increase. What happens to the equilibrium quantity and price of used automobiles?

1) What happens to the equilibrium price and quantity in the following cases? Use the graph to explain the change.

a) Increase in preference for a good
Change in equilibrium price _______________
Change in equilibrium quantity _____________

b) Increase in the production technology
Change in equilibrium price _______________
Change in equilibrium quantity _____________

c) Increase in preference for a good and increase in the production technology at the same time
Change in equilibrium price _______________
Change in equilibrium quantity _____________

d) Increase in resource prices
Change in equilibrium price _______________
Change in equilibrium quantity ____________

e) Increase in income given that good is a normal good
Change in equilibrium price ______________
Change in equilibrium quantity _____________

f) Increase in resource prices and increase in income given that good is normal good.
Change in equilibrium price _______________
Change in equilibrium quantity ____________

g) Assume goods X and Y are complements. Suppose the price of