Market Equilibrium — Practice Set 2

Supply increases and demand decreases. Equilibrium price will ___ and equilibrium quantity will ___.

A new health study praises the benefits of olive oil while a pest destroys olive groves. In the olive oil market, price will ___ and quantity will ___.

A per-unit tax on sellers creates a wedge between the price buyers pay and the price sellers receive. The new equilibrium quantity is:

Who bears more of a per-unit tax depends on:

If demand is perfectly inelastic, a per-unit tax is borne:

An increase in both demand and supply by equal horizontal amounts leaves equilibrium price ___ and raises quantity.

In the market for electric cars, battery costs fall sharply and consumer incomes rise. Assuming electric cars are normal goods, equilibrium quantity will:

A decrease in supply with perfectly elastic demand will:

Comparative statics in economics means:

If the equilibrium price of coffee rises from $4 to$5 after a frost, the most likely explanation is: