Remember, any event that shifts supply or demand will create a new equilibrium price and quantity. Our job is to predict the direction of those changes.

Engagement Message

Ready to analyze some market shocks?

Type

Multiple Choice

Practice Question

A severe drought damages the wheat crop (a key input for bread). At the same time, a new diet trend encourages people to eat less bread. What is the definite effect on equilibrium quantity and the ambiguous effect on equilibrium price?

A. Quantity will decrease; the effect on price is ambiguous. B. Quantity will increase; the effect on price is ambiguous. C. Price will decrease; the effect on quantity is ambiguous. D. Price will increase; the effect on quantity is ambiguous.

Suggested Answers

• A - Correct
• B
• C
• D

Type

Fill In The Blanks

Markdown With Blanks

Let's predict the impact of a single market event. Fill in the blanks.

A technological breakthrough makes it cheaper to produce solar panels. This will cause the equilibrium price of solar panels to [[blank:decrease]] and the equilibrium quantity to [[blank:increase]].

Suggested Answers

• increase
• decrease

Type

Sort Into Boxes

Practice Question

Sort these market events based on their effect on the equilibrium price of new cars.

Labels

• First Box Label: Increases Price
• Second Box Label: Decreases Price

First Box Items