High School Economics Quiz: Shortages And Surpluses
20 questions · exam conditions
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Shortages And SurplusesQuestion 1 of 20

In a particular market, quantity demanded is 200 units and quantity supplied is 120 units at the current market price of $10. Assume the demand curve is Qd=300−10PQ_d = 300 - 10P and the supply curve is Qs=20+10PQ_s = 20 + 10P.

What price adjustment is necessary to bring this market to equilibrium?

The price must rise by $4.
The price must fall by $4.
The price must rise by $6.
The price must fall by $6.
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High School Economics Quiz

High School Economics Quiz: Shortages And Surpluses

Practice Shortages And Surpluses in High School Economics with focused quiz questions that help you check what you know, review explanations, and build confidence with test-style prompts.

What this quiz covers

This quiz focuses on Shortages And Surpluses, giving you a quick way to practice the rules, question types, and explanations that matter most for High School Economics.

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Try each quiz question before looking at the correct answer. Use the explanations to review missed ideas, then come back to similar questions until the pattern feels familiar.

All questions

Question 1

In a particular market, quantity demanded is 200 units and quantity supplied is 120 units at the current market price of $10. Assume the demand curve is Qd=300−10PQ_d = 300 - 10P and the supply curve is Qs=20+10PQ_s = 20 + 10P.

What price adjustment is necessary to bring this market to equilibrium?

  1. The price must rise by $4. (correct answer)
  2. The price must fall by $4.
  3. The price must rise by $6.
  4. The price must fall by $6.
Explanation: First, verify the initial state: At P=$10, Qd=300−10(10)=200Q_d = 300 - 10(10) = 200 and Qs=20+10(10)=120Q_s = 20 + 10(10) = 120. There is a shortage of 200−120=80200 - 120 = 80 units, so the price must rise. Next, find the equilibrium price by setting Qd=QsQ_d = Q_s: 300−10P=20+10P⇒280=20P⇒P=14300 - 10P = 20 + 10P \Rightarrow 280 = 20P \Rightarrow P = 14. The equilibrium price is $14. The initial price was 10. Therefore, the price must rise by \(14 - $10 = $4). B and D incorrectly state the price will fall. C is an incorrect calculation of the required price change.

Question 2

The minimum wage is a legal price floor in the labor market. If the government raises the minimum wage to a level above the current equilibrium wage for low-skilled workers, what is the expected result?

  1. A surplus of jobs, as more firms will seek to hire workers.
  2. A shortage of labor, as fewer people will be willing to work.
  3. A surplus of labor, as the quantity of labor supplied will exceed the quantity demanded. (correct answer)
  4. A decrease in the equilibrium wage rate to offset the government mandate.
Explanation: In the labor market, workers are the suppliers and firms are the demanders. A minimum wage above equilibrium acts as a binding price floor. At this higher wage, more people will be willing to supply their labor, but firms will demand less labor (they will hire fewer workers). This results in the quantity of labor supplied exceeding the quantity of labor demanded, which is a surplus of labor, more commonly known as unemployment. A describes a labor shortage. B incorrectly describes the worker response. D is impossible, as the price floor prevents the wage from falling.

Question 3

A new popular health trend significantly increases the demand for avocados. In the immediate aftermath of this demand shift, and before prices have a chance to adjust, what is the state of the avocado market at its original equilibrium price?

  1. A shortage exists, as the quantity demanded now exceeds the quantity supplied. (correct answer)
  2. A surplus exists, as suppliers increase their quantity supplied to meet the new higher demand.
  3. The market remains in equilibrium, as the price has not yet changed.
  4. A surplus exists, as the increase in demand causes a corresponding increase in supply.
Explanation: An increase in demand means that at any given price, consumers want to buy more avocados. At the original equilibrium price, the quantity consumers want to buy is now greater than the quantity suppliers are willing to sell, creating a condition of excess demand, which is a shortage. The price will then be bid up to a new, higher equilibrium. B is incorrect because suppliers cannot instantaneously increase quantity supplied; this is a movement along the supply curve that occurs as price rises. C is incorrect because the shift in demand has moved the market out of equilibrium, even if the price is temporarily unchanged. D incorrectly conflates an increase in demand with an increase in supply; the supply curve itself does not shift.

Question 4

In the market for a specific type of advanced microchip, the quantity demanded is represented by the equation Qd=150−2PQ_d = 150 - 2P, and the quantity supplied is represented by Qs=3P−50Q_s = 3P - 50, where P is the price in dollars.

If a government regulation temporarily caps the price of these microchips at $35, what is the resulting condition in the market?

  1. A surplus of 25 units.
  2. A shortage of 25 units. (correct answer)
  3. A shortage of 45 units.
  4. A surplus of 45 units.
Explanation: First, find the equilibrium price by setting Qd=QsQ_d = Q_s: 150−2P=3P−50⇒200=5P⇒P=40150 - 2P = 3P - 50 \Rightarrow 200 = 5P \Rightarrow P = 40. The equilibrium price is $40. The government cap is at $35, which is below equilibrium, making it a binding price ceiling. At P = $35: Quantity demanded is Qd=150−2(35)=150−70=80Q_d = 150 - 2(35) = 150 - 70 = 80. Quantity supplied is Qs=3(35)−50=105−50=55Q_s = 3(35) - 50 = 105 - 50 = 55. The shortage is the difference: Qd−Qs=80−55=25Q_d - Q_s = 80 - 55 = 25 units. A is incorrect as it identifies a surplus. C and D are incorrect calculations.

Question 5

A sudden frost damages a large portion of the coffee bean crop. In the market for coffee, what is the most likely sequence of events following this supply shock?

  1. An immediate surplus at the original price, leading to a fall in the price of coffee.
  2. An immediate shortage at the original price, leading to a rise in the price of coffee. (correct answer)
  3. An immediate decrease in demand for coffee, leading to a new, lower equilibrium price.
  4. An immediate shortage, followed by a rightward shift in the supply curve as new growers enter the market.
Explanation: The frost damages the crop, which represents a decrease in supply (a leftward shift of the supply curve). At the original equilibrium price, the quantity supplied is now less than the quantity demanded, creating a shortage. To resolve this shortage, consumers will bid up the price. As the price rises, quantity supplied will increase (along the new supply curve) and quantity demanded will decrease until a new, higher equilibrium price is reached. A incorrectly identifies a surplus. C incorrectly suggests a decrease in demand. D incorrectly suggests the supply curve would shift right in the short term.

Question 6

Consider a competitive market for rental apartments where the equilibrium rent is $1,200 per month. The city government then imposes a rent control law, setting a maximum legal rent of $1,500 per month. What is the most likely immediate effect on the market?

  1. A shortage of apartments will be created as demand increases.
  2. A surplus of apartments will be created as supply increases.
  3. There will be no change to the market-clearing rent or quantity. (correct answer)
  4. The market price will rise to $1,500, creating a surplus of apartments.
Explanation: A price control is only 'binding' if it forces the market to operate at a price different from the equilibrium. In this case, the price ceiling (1,500)isset∗above∗theequilibriumprice(1,500) is set *above* the equilibrium price (1,200). Since the market-clearing price is already below the legal maximum, the law has no effect. The market will continue to operate at the equilibrium of $1,200. This is a non-binding price ceiling. A and B are incorrect because no shortage or surplus is created. D is incorrect because the market price will remain at the lower equilibrium level, not rise to the ceiling.

Question 7

Anti-price-gouging laws, which limit how much prices can rise after a natural disaster, are a form of price control. If a hurricane disrupts supply chains for bottled water and these laws prevent stores from raising prices, what is a primary economic consequence?

  1. A large surplus of water, as the capped price encourages overproduction.
  2. The efficient allocation of water to those who value it most highly.
  3. A persistent shortage, as quantity demanded exceeds the diminished quantity supplied. (correct answer)
  4. A rapid return to market equilibrium once the disaster has passed.
Explanation: After a disaster, demand for essential goods like water increases, and supply may decrease due to logistical issues. Both factors push the equilibrium price up. Anti-price-gouging laws act as a binding price ceiling, holding the price below the new, higher equilibrium. At this artificially low price, the quantity consumers want to buy will far exceed the limited quantity available, resulting in a severe and persistent shortage. A is the opposite of what occurs. B is incorrect; price ceilings prevent prices from rationing goods, leading to inefficient allocation (e.g., through long lines or personal connections). D is incorrect because the price ceiling exacerbates the disequilibrium.

Question 8

Imagine a market for collectible sneakers where new, limited-edition shoes are released at a fixed retail price. The shoes sell out almost instantly, and then appear on resale websites for many times the original price. This phenomenon indicates that the original retail price was set...

  1. above the equilibrium price, creating a surplus for resellers to profit from.
  2. at the equilibrium price, but demand increased after the initial sale.
  3. below the equilibrium price, creating a shortage that the resale market addresses. (correct answer)
  4. at the correct market-clearing level, but supply was artificially restricted by the manufacturer.
Explanation: The fact that the shoes sell out instantly signifies that at the retail price, the quantity demanded far exceeded the quantity supplied. This is the definition of a shortage. The high prices on the resale market are evidence of the true equilibrium price, which is much higher than the retail price. The retail price was essentially a binding price ceiling (even if self-imposed by the company), leading to a shortage. A is incorrect because a price above equilibrium would result in a surplus (unsold shoes). B is less likely; the high demand existed at the moment of sale. D is confusing; while supply is restricted (that's what makes them limited-edition), the price was not at the market-clearing level for that restricted supply.

Question 9

A government wishes to support farmers by setting a legal price for milk. To be effective in raising farmers' incomes, this price must be set   the equilibrium price, and it will result in a   of milk.

  1. above; shortage
  2. below; surplus
  3. below; shortage
  4. above; surplus (correct answer)
Explanation: To help farmers by ensuring they receive a higher price, the government must set a price floor above the market equilibrium price. If it were set below, the market would simply ignore it and trade at the higher equilibrium price. When a binding price floor is in place, the quantity of milk farmers are willing to supply at that high price will be greater than the quantity consumers are willing to buy, resulting in a surplus (excess supply). The other options incorrectly pair the price level with the market outcome.

Question 10

Technological advancements in robotics lead to a significant increase in the supply of manufactured goods. If demand for these goods remains constant, what is the initial market imbalance created and what is the subsequent price adjustment?

  1. An initial surplus, followed by a fall in price. (correct answer)
  2. An initial shortage, followed by a rise in price.
  3. An initial surplus, followed by a rise in price.
  4. An initial shortage, followed by a fall in price.
Explanation: An increase in supply means the supply curve shifts to the right. At the original equilibrium price, the quantity supplied is now greater than the quantity demanded, creating an initial surplus (excess supply). To clear this surplus, producers will compete by lowering their prices. As the price falls, quantity demanded increases and quantity supplied decreases (movements along the curves) until a new equilibrium is reached at a lower price. B describes the events following a demand increase. C and D incorrectly match the initial imbalance with the subsequent price adjustment.

Question 11

In the market for used textbooks, the equilibrium price is $50. A university bookstore chain implements a new policy to buy back any textbook at a guaranteed price of $40. At the same time, a new digital edition becomes available, reducing student demand for used physical copies. What is the likely result of these two simultaneous events in the used textbook market?

  1. A persistent surplus at the $40 price, supported by the bookstore's buy-back program. (correct answer)
  2. A persistent shortage at the $40 price, as students rush to sell their books.
  3. The market price will fall below $40, rendering the buy-back program irrelevant.
  4. The market price will remain at the original equilibrium of $50 due to the price floor.
Explanation: The reduced student demand shifts the demand curve to the left, which would normally cause the equilibrium price to fall below $50. The bookstore's $40 buy-back policy acts as a price floor. If the new equilibrium price would have been, for example, $30, then the $40 floor is binding. At $40, the quantity of books students want to sell (supply) will be greater than the quantity other students want to buy (demand). This creates a surplus, which the bookstore absorbs by purchasing the excess books. B is incorrect because a price floor creates a surplus. C is incorrect because the floor prevents the price from falling below $40. D is incorrect because the demand shift changes the original equilibrium.

Question 12

A firm observes that its inventory of a particular product is unexpectedly shrinking. Assuming no change in the firm's production levels, this observation is a signal of what market condition and what likely price adjustment will follow?

  1. A surplus, which will be corrected by a decrease in price.
  2. A surplus, which will be corrected by an increase in price.
  3. A shortage, which will be corrected by a decrease in price.
  4. A shortage, which will be corrected by an increase in price. (correct answer)
Explanation: Unexpectedly shrinking inventory means that goods are being sold faster than they are being produced or replenished. This indicates that at the current price, quantity demanded is greater than quantity supplied, which is a shortage. In a market economy, a shortage signals to producers that the price is too low. To ration the limited supply and move towards equilibrium, the price will tend to increase. A and B incorrectly identify the condition as a surplus. C correctly identifies the shortage but incorrectly states the price adjustment.

Question 13

In a market with 'sticky' prices (prices that do not adjust quickly), what is the consequence of a sudden, unexpected decrease in supply?

  1. A smaller but more persistent shortage than if prices were flexible.
  2. A larger and more persistent shortage than if prices were flexible. (correct answer)
  3. A temporary surplus that is quickly eliminated as the price falls.
  4. A rapid price increase to a new, higher equilibrium level.
Explanation: A decrease in supply shifts the supply curve left, creating a shortage at the original price. In a market with flexible prices, the price would quickly rise to the new equilibrium, eliminating the shortage. However, if prices are 'sticky,' the price will not rise (or will rise very slowly). This inability of the price to perform its rationing function means the shortage—the gap between quantity demanded and quantity supplied at the low, sticky price—will be larger and will persist for a longer time. A suggests the shortage is smaller. C incorrectly identifies a surplus. D describes what would happen in a market with flexible, not sticky, prices.

Question 14

If consumers widely expect the price of gasoline to increase significantly next week, what is the most likely immediate consequence in the gasoline market this week?

  1. A surplus, as sellers try to sell more before the price change.
  2. A shortage, as current demand increases in anticipation of higher prices. (correct answer)
  3. No change, as the price increase has not yet occurred.
  4. A surplus, as consumers reduce their current driving to save money for next week.
Explanation: The expectation of a future price increase causes consumers to increase their demand today. They want to buy now while the price is still relatively low. This shift to the right in the current demand curve, with supply unchanged, creates a shortage at the current price. This increased current demand puts upward pressure on the price even before next week's expected rise. A is incorrect because sellers have no incentive to create a surplus. C is incorrect as market behavior is often driven by expectations of the future. D describes the opposite, and less likely, consumer behavior.

Question 15

If the price of steel, a key input in automobile manufacturing, increases significantly, what is the immediate effect in the automobile market at the original price level?

  1. A surplus, because consumers will buy fewer cars.
  2. A shortage, because the supply of automobiles decreases. (correct answer)
  3. A surplus, because manufacturers will pass the cost on to consumers.
  4. A shortage, because the demand for automobiles will increase.
Explanation: An increase in the price of an input like steel raises the cost of production for automobiles. This causes a decrease in supply, meaning the supply curve shifts to the left. At the original price, producers are now willing to supply fewer cars than before. Since demand has not changed, the quantity demanded at that original price will now exceed the new, lower quantity supplied. This creates a shortage. A and C incorrectly identify a surplus. D incorrectly states that demand will increase; if anything, the eventual price rise would decrease quantity demanded.

Question 16

A government imposes a binding price floor on an agricultural product. Which of the following describes the market mechanism that is prevented from occurring?

  1. Producers lowering prices to eliminate the resulting surplus. (correct answer)
  2. Consumers bidding up prices to eliminate the resulting shortage.
  3. An increase in supply to meet the higher price set by the floor.
  4. A decrease in demand in response to the artificially high price.
Explanation: A binding price floor is set above the equilibrium price, which leads to a surplus (quantity supplied exceeds quantity demanded). The natural market mechanism to eliminate a surplus is for producers to lower their prices. The price floor legally prevents the price from falling to its equilibrium level, thus blocking this adjustment. B is incorrect because a price floor creates a surplus, not a shortage. C describes a movement along the supply curve, which happens, but it is not the adjustment mechanism that is blocked. D describes a movement along the demand curve, which also happens, but it is a reaction to the high price, not the blocked adjustment mechanism.

Question 17

In a market experiencing a shortage, the upward pressure on price is primarily caused by the actions of which group?

  1. Sellers, who recognize they can charge more due to high demand.
  2. Buyers, who compete against each other by offering to pay more. (correct answer)
  3. Government, which intervenes to ensure the market reaches equilibrium.
  4. Producers, who collectively agree to raise prices to increase their profits.
Explanation: A shortage exists when quantity demanded exceeds quantity supplied at the current price. This means there are more buyers wanting the good than there are units available. In this situation, buyers will compete with one another to obtain the limited goods, often by indicating they are willing to pay a higher price. This competitive bidding from the demand side drives the price up. While sellers (A) will certainly accept and may raise posted prices in response, the fundamental pressure comes from the buyers' collective behavior. D implies collusion, which is not the standard market mechanism. C is incorrect as this adjustment process is a feature of free markets, not government intervention.

Question 18

Which of the following scenarios describes a market surplus but NOT a situation of scarcity?

  1. A toy is so popular that stores sell out, but more are being produced.
  2. There is more breathable air available than people wish to consume at a price of zero.
  3. Farmers produce more wheat than consumers will buy at the government-mandated price. (correct answer)
  4. A company sets the price for its new phone so high that few people can afford it.
Explanation: This question tests the distinction between surplus (a market condition) and scarcity (a fundamental economic concept). Scarcity means that resources are limited and wants are unlimited. Wheat is a scarce good because it requires land, labor, and capital to produce. A surplus occurs when, at a given price (like a government price floor), the quantity supplied exceeds the quantity demanded. Therefore, there can be a surplus of a scarce good. A describes a shortage. B describes a good (air) that is not scarce, so it cannot have a market surplus in the economic sense. D describes a high price leading to low quantity demanded, but not necessarily a surplus if the quantity supplied is also low.

Question 19

Which statement accurately distinguishes between a shortage and scarcity?

  1. Scarcity is a temporary market condition, while a shortage is a permanent feature of all economies.
  2. A shortage exists when a good is scarce, and scarcity exists when a good is in short supply.
  3. Scarcity is the fundamental condition of limited resources, while a shortage is a price-specific condition of excess demand. (correct answer)
  4. A shortage occurs when price is above equilibrium, while scarcity occurs when price is below equilibrium.
Explanation: This question tests the precise definitions of two often-confused terms. Scarcity is a core concept in economics: society's wants exceed the resources available to satisfy them. It is a universal and permanent condition. A shortage, however, is a market-specific and price-specific phenomenon. It occurs only when the current price of a good is below its equilibrium price, causing quantity demanded to exceed quantity supplied. You can have a surplus of a scarce good (like wheat). A incorrectly reverses the definitions. B is circular and unhelpful. D incorrectly defines a shortage and misapplies the concept of scarcity relative to price.

Question 20

If a market is experiencing a surplus, which of the following describes the series of events that will lead it back toward equilibrium?

  1. The price will fall, causing quantity demanded to rise and quantity supplied to fall until they are equal. (correct answer)
  2. The price will rise, causing quantity demanded to fall and quantity supplied to rise until they are equal.
  3. Demand will increase and supply will decrease to absorb the excess supply, causing the price to stabilize.
  4. Sellers will reduce their output, causing the supply curve to shift left and the price to rise to the equilibrium level.
Explanation: A surplus means quantity supplied exceeds quantity demanded at the current price. To clear their inventories, sellers will lower the price. This price decrease has two effects: it increases the quantity demanded (movement down along the demand curve) and decreases the quantity supplied (movement down along the supply curve). This process continues until the two quantities are equal at the equilibrium price. B describes the adjustment from a shortage. C incorrectly describes shifts in the curves, whereas the adjustment involves movements along the existing curves. D describes a shift in the supply curve, which is not the mechanism for eliminating a surplus; the adjustment is a change in quantity supplied due to a price change.