AACSB: Application of Knowledge
Topic: Evidence‐Based Economics: Is Facebook Free?
1.4 The Second Principle of Economics: Equilibrium
1) Which of the following statements is true of equilibrium?
A) Economic agents have an incentive to divert from equilibrium.
B) Each economic agent can reach equilibrium irrespective of the actions of others.
C) In equilibrium, the opportunity cost of the choices made by each economic agent is zero.
D) In equilibrium, all economic agents are choosing the best feasible option simultaneously.
Answer: D
Difficulty: Easy
AACSB: Analytical Thinking
Topic: The Second Principle of Economics: Equilibrium
2) Which of the following will hold true if the market for cameras is in equilibrium at a price of $40?
A) Sellers of cameras will have an incentive to charge a price higher than $40.
B) The quantity of cameras produced will equal the quantity of cameras bought in the market.
C) Buyers of cameras will want to buy fewer cameras than they are purchasing at equilibrium.
D) If the cost of producing cameras falls below $40 per camera, all sellers will stop supplying cameras.
Answer: B
Difficulty: Medium
AACSB: Application of Knowledge
Topic: The Second Principle of Economics: Equilibrium
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3) When the market for a commodity is in equilibrium, ________.
A) no economic agent will want to change his or her behavior
B) there will still be some unsold stock of the commodity
C) all buyers of the commodity will want to change their behavior
D) all sellers of the commodity will want to change their behavior
Answer: A
Difficulty: Easy
AACSB: Analytical Thinking
Topic: The Second Principle of Economics: Equilibrium
4) Which of the following is true of equilibrium?
A) Equilibrium refers to a situation where the government allocates resources among economic agents.
B) Equilibrium refers to a situation where all economic agents simultaneously optimize after considering
one anotherʹs actions.
C) Equilibrium refers to a situation where all economic agents are making suboptimal choices and have an
incentive to change their behavior.
D) Equilibrium refers to a situation where an economic agent can be made better off without making
anyone else worse off.
Answer: B
Difficulty: Easy
AACSB: Analytical Thinking
Topic: The Second Principle of Economics: Equilibrium
5) Suppose the market for pizza slices is in equilibrium at a price of $1 per slice. What conditions are likely
to be satisfied in the pizza slice market?
Answer: The conditions that will be satisfied when the market for pizza slices is in equilibrium are the
following:
i) The number of pizza slices made by sellers will be equal to the number of pizza slices purchased by