Question 1

Which of the following best describes a perfectly competitive market?

Accepted Answer

A market with many buyers and sellers, identical products, and no barriers to entry.

Question 2

According to the law of demand, what happens to the quantity demanded of a product when its price increases, ceteris paribus?

Accepted Answer

Quantity demanded decreases.

Question 3

Which effect explains why consumers buy more of a good when its price falls, making it relatively cheaper compared to other goods?

Accepted Answer

Substitution effect

Question 4

If ramen noodles are considered an inferior good, what happens to the demand for ramen noodles when consumer incomes rise?

Accepted Answer

Demand for ramen noodles decreases.

Question 5

A decrease in the price of peanut butter is likely to have what effect on the demand for jelly, assuming they are complements?

Accepted Answer

Demand for jelly increases.

Question 6

Which of the following would cause a movement along the demand curve for coffee?

Accepted Answer

A change in the price of coffee.

Question 7

Suppose the price of a good increases. According to the law of supply, what happens to the quantity supplied?

Accepted Answer

Quantity supplied increases.

Question 8

Which of the following is a shifter of supply, but NOT a shifter of quantity supplied?

Accepted Answer

A change in technology.

Question 9

If a new technology reduces the cost of producing smartphones, what is the likely effect on the supply curve for smartphones?

Accepted Answer

The supply curve shifts to the right.

Question 10

Market equilibrium occurs when:

Accepted Answer

Quantity demanded equals quantity supplied.

Question 11

If the demand for electric cars increases, what happens to the equilibrium price and quantity, assuming supply remains constant?

Accepted Answer

Equilibrium price increases, equilibrium quantity increases.

Question 12

Suppose a hurricane destroys a large portion of orange crops in Florida. What is the likely effect on the supply and equilibrium price of oranges?

Accepted Answer

Supply decreases, equilibrium price increases.

Question 13

Which of the following best illustrates the invisible hand principle?

Accepted Answer

Individuals pursuing their own interests unintentionally promote society's economic well-being.

Question 14

If both demand and supply for a product increase simultaneously, what can be said about the equilibrium quantity?

Accepted Answer

Equilibrium quantity will definitely increase.

Question 15

Which formula represents the condition for market equilibrium?

Accepted Answer

$$Q_d = Q_s$$

Question 16

If the price elasticity of demand for a product is greater than 1, the demand is considered:

Accepted Answer

Elastic

Question 17

A decrease in the price of a substitute good will likely have what effect on the demand for the original good?

Accepted Answer

Demand for the original good decreases.

Question 18

Which of the following scenarios would cause a shift in the supply curve for wheat?

Accepted Answer

A technological advancement in wheat farming.

Question 19

If a government imposes a tax on the production of gasoline, what is the likely effect on the supply curve?

Accepted Answer

The supply curve shifts to the left.

Question 20

Which of the following best describes economic efficiency in a market?

Accepted Answer

All potential gains from trade have been realized.

Supply, Demand, and the Market Process: Study Notes

Guida di studio - Domande di pratica