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3 • Review Questions 81

Review Questions

12. What determines the level of prices in a market?

13. What does a downward-sloping demand curve mean about how buyers in a market will react to a higher

price?

14. Will demand curves have the same exact shape in all markets? If not, how will they differ?

15. Will supply curves have the same shape in all markets? If not, how will they differ?

16. What is the relationship between quantity demanded and quantity supplied at equilibrium? What is the

relationship when there is a shortage? What is the relationship when there is a surplus?

17. How can you locate the equilibrium point on a demand and supply graph?

18. If the price is above the equilibrium level, would you predict a surplus or a shortage? If the price is below

the equilibrium level, would you predict a surplus or a shortage? Why?

19. When the price is above the equilibrium, explain how market forces move the market price to equilibrium.
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