Question 1

Which of the following events would cause a rightward shift in the demand curve for orange juice, assuming orange juice is a normal good?

Accepted Answer

An increase in the number of buyers

Question 2

Suppose the price of flour, an input for muffins, falls. What is the most likely effect on the supply curve for muffins?

Accepted Answer

The supply curve shifts to the right

Question 3

If the market price of muffins is set above the equilibrium price, what will occur in the market?

Accepted Answer

A surplus will occur, causing the price to fall

Question 4

Which of the following best describes the law of demand?

Accepted Answer

As the price of a good rises, the quantity demanded falls

Question 5

Consider the market for hamburgers and pizza, which are substitutes. If the price of pizza increases, what happens to the demand for hamburgers?

Accepted Answer

The demand for hamburgers increases

Question 6

Which of the following is NOT a non-price determinant of demand?

Accepted Answer

Price of the good itself

Question 7

If a technological improvement reduces the cost of producing apple juice, what is the expected effect on the supply curve for apple juice?

Accepted Answer

The supply curve shifts to the right

Question 8

Suppose orange juice and apple juice are substitutes. If the price of apple juice falls, what happens to the demand for orange juice?

Accepted Answer

The demand for orange juice decreases

Question 9

Which equation correctly represents market demand when there are two buyers, A and B, with individual demand functions $$Q_A(P)$$ and $$Q_B(P)$$?

Accepted Answer

$$Q_{Market}(P) = Q_A(P) + Q_B(P)$$

Question 10

A decrease in the number of sellers in a market will have which effect on the supply curve?

Accepted Answer

Shift the supply curve to the left

Question 11

If the price of smartphones rises, what is the expected effect on the demand for smartphone apps, assuming they are complements?

Accepted Answer

The demand for apps decreases

Question 12

Which of the following scenarios represents a movement along the demand curve rather than a shift of the demand curve?

Accepted Answer

A change in the price of the good itself

Question 13

In a perfectly competitive market, which statement is true?

Accepted Answer

Buyers and sellers are price takers

Question 14

If both the demand and supply curves for muffins shift to the right, what is the effect on equilibrium quantity and price?

Accepted Answer

Equilibrium quantity rises, effect on price is ambiguous

Question 15

Which of the following is the correct three-step method for analyzing changes in market equilibrium?

Accepted Answer

1. Decide which curve shifts. 2. Decide the direction of the shift. 3. Compare the new and initial equilibrium.

Question 16

If a new advertising campaign convinces consumers that orange juice is healthier, what happens to the demand curve for orange juice?

Accepted Answer

It shifts to the right

Question 17

Suppose the market for muffins is in equilibrium. If the price is suddenly set below the equilibrium price, what will happen?

Accepted Answer

A shortage will occur

Question 18

Which of the following best describes the law of supply?

Accepted Answer

As the price of a good rises, the quantity supplied rises

Question 19

If the price of a good changes, which of the following will occur?

Accepted Answer

A movement along the demand curve

Question 20

Which formula represents the equilibrium condition in a market?

Accepted Answer

$$Q^d = Q^s$$

Chapter 4: The Market Forces of Supply and Demand – Principles of Microeconomics

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