12) Suppose that the quantity of cars supplied exceeds the quantity of cars demanded. We would expect that A) the price of cars will increase. B) the price of cars will decrease. C) the supply will increase (supply will shift to the right) to meet the demand. D) the demand will decrease (demand will shift to the left) to meet the supply. 13) Suppose that a market for a product is in equilibrium at a price of $3 per unit. At any price below $3 per unit A) there will be an excess demand for the product. B) there will be an excess supply of the product. C) the quantity demanded of the product will be less than the quantity supplied of that product. D) there will be a surplus of that product. 14) A government sometimes creates an excess supply of a product by setting a minimum price at which the product may be sold to consumers. This is sometimes called a A) price ceiling. B) price floor. C) tax. D) subsidy. Recall the Application about the policies used by the European Union to support the agricultural sectors of is member countries to answer the following question(s). 15) Recall the application. The policies used by the European Union to support the agricultural sectors of its member countries created excess supply. This would occur if these policies set a ________ price which was ________ the market equilibrium price. A) maximum; above B) maximum; below C) minimum; above D) minimum; below 16) Recall the application. The policies used by the European Union to support the agricultural sectors of its member countries created excess supply. Excess supply can be generated if a government establishes a A) price ceiling below the market equilibrium price. B) price ceiling above the market equilibrium price. C) price floor below the market equilibrium price. D) price floor above the market equilibrium price. 17) Recall the application. In recent years the European Union has reformed its agriculture policies by reducing or eliminating minimum prices. Ceteris paribus these policy reforms would ________ excess supply by ________ prices. A) reduce; raising B) reduce; lowering C) increase; raising D) increase; lowering 18) If the quantity of a product demanded is greater than the quantity of a product supplied there is pressure in the market to push the price downward. 19) Governments sometime create an excess demand for a product by setting a maximum price that is less than the equilibrium price resulting in a permanent excess demand for the product. This is known as a price floor. 20) Excess demand in an unregulated market will cause the price of a product to fall. 21) Excess supply in an unregulated market will cause the price of a product to fall.
