7. When a price floor is above the equilibrium price, A. quantity demanded will exceed quantity supplied, so there will be a shortage. B. quantity supplied will exceed quantity demanded, so there will be a surplus. C. the market will be in equilibrium. D. This is a trick question because price floors are generally set below the equilibrium price.

8. Consider the markets for Coca Cola and Pepsi. Assume that a recent advertising campaign by Pepsi leads people to believe that drinking Pepsi (as opposed to Coke) is beneficial to your health. What would be the effect on the equilibrium price and quantity of Coke? A. price increases, quantity decreases B. price decreases, quantity decreases C. price increases, quantity increases D. price decreases, quantity increases

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