Question 1

Refer to the first two images of gasoline prices. If the price of gasoline increases from $$1.08 to 3.49 $$per gallon, what is the most likely effect on the quantity of gasoline demanded, according to the law of demand?

Accepted Answer

The quantity demanded will decrease.

Question 2

Suppose the price of public transportation rises. According to the concept of substitutes, what is the expected effect on the demand for gasoline?

Accepted Answer

The demand for gasoline will increase.

Question 3

Which of the following would cause a movement along the demand curve for tomatoes, as shown in the third image?

Accepted Answer

A decrease in the price of tomatoes.

Question 4

If the price of gasoline increases, which type of vehicle shown in the fourth image is likely to see an increase in demand?

Accepted Answer

Small, fuel-efficient cars, because they use less gasoline.

Question 5

Using the demand schedule and curve in the fifth image, what is the equation of the demand curve if it is linear and passes through the points $$(1, 300)$$ and $$(6, 50)$$?

Accepted Answer

$$Q = 350 - 50P$$

Question 6

Refer to the sixth image. If Sue and Carlos are the only buyers in the market, what is the total quantity demanded at a price of $3 per gallon?

Accepted Answer

1,400 gallons

Question 7

Which of the following would cause a rightward shift in the market demand curve for oil, as shown in the seventh image?

Accepted Answer

A rise in consumer incomes, assuming oil is a normal good.

Question 8

Based on the eighth and ninth images, what is the difference between a shift of the demand curve and a movement along the demand curve?

Accepted Answer

A shift is caused by changes in tastes, income, or related goods; a movement is caused by a change in the good's own price.

Question 9

If the price of steak and lobster (shown in the fifteenth image) rises due to increased incomes, what type of good are steak and lobster most likely to be?

Accepted Answer

Normal goods

Question 10

Suppose the government imposes a price ceiling on gasoline below the equilibrium price. What is the most likely outcome in the gasoline market?

Accepted Answer

A shortage of gasoline

Question 11

If a new technology reduces the cost of producing smartphones, what happens to the supply curve for smartphones?

Accepted Answer

It shifts to the right.

Question 12

During the 2021 microchip shortage, what happened to the equilibrium price and quantity of new cars, assuming demand was constant?

Accepted Answer

Equilibrium price increased, equilibrium quantity decreased.

Question 13

If the supply of oil is reduced due to OPEC production cuts, what is the expected effect on the equilibrium price and quantity of oil?

Accepted Answer

Equilibrium price rises, equilibrium quantity falls.

Question 14

Which of the following is NOT a determinant of demand that would shift the demand curve for gasoline?

Accepted Answer

A change in the price of gasoline itself.

Question 15

If the price of Spam (shown in the fourteenth image) falls and it is an inferior good, what is likely to happen to its demand if consumer incomes rise?

Accepted Answer

Demand for Spam will decrease.

Question 16

Suppose a new law restricts the number of apartments that can be rented in a city, as in the Argentina rent control example. What is the likely effect on the rental market?

Accepted Answer

The supply of apartments decreases, and a shortage occurs.

Question 17

If both the demand and supply curves for oil shift to the right, what can we say about the new equilibrium quantity?

Accepted Answer

It will definitely increase.

Question 18

Which of the following best describes a perfectly competitive market?

Accepted Answer

A market where all sellers sell identical goods and no individual can affect the market price.

Question 19

If the price of gasoline falls in Venezuela (see the seventeenth image), what does the demand schedule suggest will happen to the quantity of gasoline demanded per person?

Accepted Answer

It will increase.

Demand, Supply, and Equilibrium: Microeconomics Study Guide

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