Question 1

Which of the following best describes the circular flow diagram shown in the first image?

Accepted Answer

It demonstrates the continuous movement of goods, services, and money between households and firms through input and output markets.

Question 2

According to the law of demand, as shown in the second image, what happens to the quantity demanded when the price of a good increases, ceteris paribus?

Accepted Answer

Quantity demanded decreases.

Question 3

Which of the following would cause a rightward shift in the demand curve for a normal good, as shown in the third image (right panel)?

Accepted Answer

An increase in consumer income.

Question 4

If the price of Coca-Cola increases, what is likely to happen to the demand for Pepsi, as illustrated in the fifth image?

Accepted Answer

The demand for Pepsi will increase.

Question 5

Which of the following pairs are most likely to be considered complementary goods, as depicted in the sixth image?

Accepted Answer

Coffee and donuts.

Question 6

Suppose a new technology reduces the cost of producing soybeans. What will happen to the supply curve for soybeans, as shown in the ninth image?

Accepted Answer

The supply curve will shift to the right.

Question 7

Which of the following equations best represents market equilibrium?

Accepted Answer

$$Q_d = Q_s$$

Question 8

If the current price is above the equilibrium price, as shown in the eleventh image, what will occur in the market?

Accepted Answer

There will be excess supply (surplus).

Question 9

Which of the following is NOT a factor that shifts the demand curve for a good?

Accepted Answer

A change in the price of the good itself.

Question 10

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

Accepted Answer

Increase demand for the good.

Question 11

If input prices rise for a firm, what is the most likely effect on the supply curve?

Accepted Answer

The supply curve shifts to the left.

Question 12

Which of the following best describes a movement along the demand curve?

Accepted Answer

A change in quantity demanded due to a change in the good's own price.

Question 13

Suppose the price of hamburger rises. What is the likely effect on the demand for chicken (a substitute) and ketchup (a complement)?

Accepted Answer

Demand for chicken increases; demand for ketchup decreases.

Question 14

Which of the following is an example of an inferior good?

Accepted Answer

Krispy Rice (generic substitute for Rice Krispies).

Question 15

If consumers expect the price of a good to rise in the future, what is likely to happen to current demand?

Accepted Answer

Current demand will increase.

Question 16

Which of the following would cause a leftward shift in the supply curve for corn?

Accepted Answer

An increase in the price of soybeans (an alternative crop).

Question 17

Which of the following statements about market equilibrium is correct?

Accepted Answer

At equilibrium, quantity supplied equals quantity demanded.

Question 18

If the demand for a good increases while the supply remains unchanged, what will happen to the equilibrium price and quantity?

Accepted Answer

Equilibrium price increases; equilibrium quantity increases.

Question 19

Which of the following is NOT a factor that shifts the supply curve?

Accepted Answer

A change in the price of the good itself.

Question 20

Suppose a new disease-resistant seed increases soybean yields. What is the likely effect on the equilibrium price and quantity of soybeans?

Accepted Answer

Equilibrium price decreases; equilibrium quantity increases.

Demand, Supply, and Market Equilibrium: Core Concepts in Microeconomics

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