Question 1

Which of the following best describes the law of demand?

Accepted Answer

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

Question 2

Suppose the price of wheat rises due to a drought and a conflict in a major wheat-producing region. What is the most likely effect on the supply curve for bread?

Accepted Answer

The supply curve for bread shifts to the left.

Question 3

Which of the following is an example of a change in quantity demanded, not a change in demand?

Accepted Answer

A decrease in the price of camera apps leads to more camera apps being purchased.

Question 4

If the money price of electricity rises by 14% in a year when the overall inflation rate is 7%, what happens to the relative price of electricity?

Accepted Answer

The relative price of electricity increases.

Question 5

Which of the following would cause a rightward shift in the demand curve for electric vehicles?

Accepted Answer

An increase in consumer incomes, assuming electric vehicles are normal goods.

Question 6

What is the equilibrium price in a market?

Accepted Answer

The price at which quantity demanded equals quantity supplied.

Question 7

Suppose the government introduces a subsidy for producers of solar panels. What is the most likely effect on the supply curve for solar panels?

Accepted Answer

The supply curve shifts to the right.

Question 8

Which of the following is a ceteris paribus condition for the demand curve?

Accepted Answer

Consumer income.

Question 9

If the price of a substitute good increases, what happens to the demand for the original good?

Accepted Answer

The demand for the original good increases.

Question 10

A new app allows hospitals to schedule nurses more efficiently, helping the market for nursing services reach equilibrium faster. What is the economic significance of this?

Accepted Answer

It reduces the time spent in surplus or shortage, moving the market toward the equilibrium wage more quickly.

Question 11

Which of the following best describes a surplus in a market?

Accepted Answer

Quantity supplied is greater than quantity demanded.

Question 12

If the price of a complement good increases, what happens to the demand for the original good?

Accepted Answer

The demand for the original good decreases.

Question 13

Which of the following is NOT a determinant of supply?

Accepted Answer

Consumer tastes and preferences.

Question 14

Suppose the market for pork in the U.S. experiences a rightward shift in supply due to decreased exports. What is the likely short-term result at the previous market-clearing price?

Accepted Answer

A surplus of pork.

Question 15

Which equation correctly expresses the relative price of good A in terms of good B?

Accepted Answer

$$\$$	ext{Price of A} / \$$	ext{Price of B}$$

Question 16

Which of the following scenarios would cause a movement along the supply curve for bread, rather than a shift of the curve?

Accepted Answer

A decrease in the price of bread.

Question 17

If the demand for ocean shipping services decreases due to a global decline in trade, what happens to the market demand curve for shipping?

Accepted Answer

It shifts to the left.

Question 18

Which of the following is true about market equilibrium?

Accepted Answer

It is a stable point where quantity supplied equals quantity demanded.

Question 19

Suppose the price of electric steel, a key input for electric vehicles, rises significantly. What is the most likely effect on the supply curve for electric vehicles?

Accepted Answer

The supply curve shifts to the left.

Question 20

Which of the following best describes an inferior good?

Accepted Answer

A good for which demand falls as income rises.

Demand and Supply: Foundations of Market Equilibrium

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