Question 1

Which of the following best describes the law of demand as illustrated by the demand curve in the provided graphs?

Accepted Answer

As the price of a good increases, the quantity demanded decreases.

Question 2

Suppose the price of bottled water falls from $$2.00 to 1.50 $$per bottle. According to the demand schedule, what happens to the quantity demanded?

Accepted Answer

It increases from 0 to 1 bottle per day.

Question 3

If Tina and Tim are the only consumers in the market, and at a price of $1.00 per bottle Tina demands 2 bottles and Tim demands 1 bottle, what is the market demand at this price?

Accepted Answer

$$3$$

Question 4

Which of the following would cause a shift of the demand curve for bottled water to the right?

Accepted Answer

An increase in the number of buyers.

Question 5

What is the difference between a movement along the demand curve and a shift of the demand curve?

Accepted Answer

A movement along the demand curve is caused by a change in the price of the good, while a shift is caused by changes in other factors such as income or the price of substitutes.

Question 6

If the price of a substitute for bottled water falls, what is likely to happen to the demand for bottled water?

Accepted Answer

The demand for bottled water will decrease.

Question 7

Given the supply schedule, what is the quantity supplied at a price of $1.50 per bottle?

Accepted Answer

$$2$$ thousand bottles per day

Question 8

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

Accepted Answer

An increase in the cost of production.

Question 9

If the market supply at $1.00 per bottle is 5,000 bottles per day, and the market demand at the same price is 3,000 bottles per day, what is the likely market outcome?

Accepted Answer

There will be a surplus of 2,000 bottles per day.

Question 10

Suppose the price of running shoes increases. What is the likely effect on the demand for running socks, a complementary good?

Accepted Answer

The demand for running socks will decrease.

Question 11

If the supply curve for bottled water shifts to the right, which of the following is a possible cause?

Accepted Answer

A technological improvement in bottling.

Question 12

Which equation represents the market demand if Tina's demand is $$Q_T = 3 - P$$ and Tim's demand is $$Q_M = 2 - 0.5P$$?

Accepted Answer

$$Q = Q_T + Q_M = 5 - 1.5P$$

Question 13

A decrease in the expected future price of bottled water will likely have what effect on the current supply?

Accepted Answer

Current supply will increase.

Question 14

If the price of a complement for coffee (such as bagels) falls, what is the likely effect on the demand for coffee?

Accepted Answer

The demand for coffee will increase.

Question 15

Which of the following best explains why the supply curve is upward sloping?

Accepted Answer

As the price increases, producers are willing to supply more because higher prices cover higher marginal costs.

Question 16

If the number of buyers in a market increases, what happens to the market demand curve?

Accepted Answer

It shifts to the right.

Question 17

Suppose a drought reduces the coffee harvest. What is the likely effect on the supply curve for coffee?

Accepted Answer

The supply curve shifts to the left.

Question 18

If the price of airline travel falls, what is the likely effect on the quantity demanded for airline travel?

Accepted Answer

The quantity demanded will increase.

Question 19

Which of the following is NOT a determinant of demand?

Accepted Answer

The price of inputs used to produce the good.

Microeconomics: The Market Forces of Supply and Demand

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